SCI Puts Q1 Growth at 7.6%

The “industries and mines”, and “services” sectors grew by 13.8% and 4.5% respectively, but “agriculture” contracted by 4.5%, according to a new report posted on the SCI website.

The center noted that GDP growth, excluding the oil sector, stood at 4.6% in Q1 (spring).

The SCI report came shortly after the Central Bank of Iran had reported that the Iranian economy grew by 6.2% in Q1.

According to a new report published on the bank’s website, except for the drought-hit agriculture with -0.9%, all economic sectors saw growth during the period (spring): oil with 23.3%, industries and mines with 2.1%, and services with 7%.

Noting that the services sector has shown distinct signs of recovery after it was hit hard by the Covid-19 pandemic in the first quarter of last year (registering a -2.5% growth), the report attributes the expansion mainly to the subsectors of “transportation and warehousing”, “health and social work”, “wholesale, retail and auto repair”, “information and communications”, and “professional, scientific and vocational”.

The report added that growth, excluding the oil sector, stood at 4.7% in Q1.

According to the CBI, the economy also expanded in the fiscal 2020-21.

Iran’s gross domestic product in the last fiscal year (March 2020-21) registered a 3.6% growth, according to an earlier report. 

Economic growth, excluding oil, expanded by 2.5%, it added. 

According to SCI, last fiscal year’s GDP expanded by 0.7% compared with the year before. Economic growth, excluding oil, was near zero, SCI reported.

The center’s sectoral breakdown of growth rates shows that the “agriculture” and “industries and mines” sectors experienced a respective growth of 3.5% and 4.2% during the period. The “services” sector contracted by 2% in the fiscal 2020-21. 

Discrepancies were also seen in SCI and CBI reports on Iran's economic growth in the fiscal 2019-20.

According to SCI, the Iranian economy experienced a -7% contraction in the fiscal 2019-20.

According to the center, the GDP shrank by -0.6%, excluding oil production.

The sectors of "industries and mines", and "services" saw a respective contraction of 14.7% and 0.3%.

This is while the CBI put last fiscal year's growth at -6.5%. Excluding the oil sector, it estimated growth to have reached 1.1%.

According to the bank, the oil sector shrank by a whopping 38.7% amid sanctions on Iran's oil sales.

The sectors of “agriculture” and "industries and mines" saw a respective growth of 8.8% and 2.3%, while “services” contracted by 0.2%, according to CBI’s account.

Iran's gross domestic product shrank by 4.9% in the fiscal 2018-19 compared to the year before, according to SCI, with the production of two groups of "industries" and "agriculture" at -9.6% and -1.5% respectively and “services” at 0.02%. The center put that year's growth, without taking oil production into account, at -2.4%.

The CBI did not release any report on the fiscal 2018-19 economic growth.

Iran’s economy emerged from recession in the fiscal 2014-15 with a 3% growth after two years of recession when the economy contracted 5.8% and 1.9% back to back, according to the Central Bank of Iran.

Growth in 2015-16 has been put at -1.6% by CBI and 0.9% by SCI.

The CBI has put 2016-17 growth at 12.5% while SCI says it was much lower and near 8.3%.

Boost in Oil Production

As in spring, the rise in oil production was the main driver of growth in the last Iranian year. The sector saw a whopping 11.2% expansion by generating 858.24 trillion rials ($3.57 billion), according to CBI.

“Iran is determined to increase its oil exports despite US sanctions imposed on Tehran's crude oil sales,” Iranian Oil Minister Javad Owji said recently, adding that the use of oil sanctions as a "political tool" would harm the market.

"There is strong will in Iran to increase oil exports despite the unjust and illegal US sanctions," Owji told state TV.

"I promise that good things will happen regarding Iran's oil sales in the coming months."

Oil exports, Iran’s main revenue source, have plunged under US sanctions, which were reimposed three years ago after Washington abandoned Tehran's 2015 nuclear deal with six powers, including the US.

Tehran does not disclose its crude export data, but assessments based on shipping and other sources suggest a fall from about 2.8 million barrels per day (bpd) in 2018 to as low as 200,000 bpd. One survey put exports at 600,000 bpd in June.

"Iran will return to its pre-sanctions crude production level as soon as US sanctions on Iran are lifted," Owji said.

Since April 9, Tehran and six world powers have been in talks to revive the nuclear pact. The sixth round of negotiations adjourned on June 20 and the next round of talks has yet to be scheduled.

Owji said Iran backed a decision made by the Organization of Petroleum Exporting Countries and allies, a group known as OPEC+, to stick to a policy from July of phasing out record output cuts by adding 400,000 barrels per day (bpd) a month to the market, Reuters reported.

The CBI’s sectoral breakdown of last fiscal year’s growth rates shows that the “agriculture” and “industries and mines” groups experienced a growth of 4.5% and 7.1% during the last year. The services sector was the main laggard of economic growth during the period with zero economic growth. 

Construction, which is a subsector of “industries and mines” group, expanded by 7.7% to reach 311.87 trillion rials ($1.29 billion).