Statistical Center of Iran: Q3 Non-Oil Growth at 0.9%

EghtesadOnline: Iran's gross domestic product, excluding oil production, recorded a positive growth rate of 0.9% in the third quarter of the current fiscal year (Sept. 23-Dec. 21).

News ID: ۷۴۹۵۹۸

12 February 2020

The overall GDP growth, including oil production, however, stood at -1.7% for the period, new data provided by the head of the Statistical Center of Iran, Javad Hosseinzadeh, show, according to Financial Tribune.

The sectors of agriculture, industries and mines, and services registered growth rates of -1.4%, -1.9% and -0.7% respectively in Q3, Fars News Agency reported.

Economic growth in the first three quarters has been put at -7.6%. By excluding oil, the figure stands at 0%.

The sectors of agriculture, industries and mines, and services registered the growth rates of 3.2%, -16.6% and -0.2 respectively for the three quarters.

"The gross domestic product excluding oil has been positive during the first six months of [the Iranian year] 1398 [March 21-Sept. 22]," the governor of the Central Bank of Iran said in his Instagram post in mid-December.

Abdolnasser Hemmati added that in the second quarter of the current fiscal year (June 22-Sept. 22), the sectors of "agriculture", "industries and mines", and "services" saw the respective growth rate of +9.5%, +0.4%, and -1.4%, leading to an overall economic growth of +0.6% in Q2.

"All in all, we experienced +0.5% in [non-oil] economic growth during the first half of the year," Hemmati said.

The CBI chief did not reveal growth in the oil sector and only said: "The oil sector is undergoing its own special circumstances."

Hemmati first came out to announce the return of growth to Iran's economy in September by saying: "The first three months of the year [13]98 [the current Iranian year that started on March 21, 2019], saw the non-oil sector, which is the productive sector of the economy, grow 0.4% compared to the corresponding period of [13]97 [last Iranian year]," wrote in a piece published on the central bank's website.

"Although this growth is well below the potential capacity, considering the negative growth rates of the three preceding quarters and the beginning of decline in inflation, it's a cause for hope," he added.

He attributed the return of relative stability in the value of the national currency against foreign currencies and the die-down of external shocks from sanctions and the United States "maximum pressure" campaign against Iran to Q1 growth.

The rial lost about two-thirds of its value against the dollar in the last Iranian year (March 2018-19).

Iran's gross domestic product shrank by 4.9% in the current fiscal year compared to the year before, according to the Statistical Center of Iran.

Economic growth, excluding oil, stood at -2.4%.

The production of the two groups of "industry" and "agriculture" contracted by 9.6% and 1.5% respectively.

The "services" group posted a meager 0.02% growth.

The solid increase in agricultural production this year has been the main driver of economic growth, as reported by Iranian officials.

The sector reportedly saw the highest growth rate of +9.5% in H1. At 6.5%, the agriculture sector also saw the highest growth among Iran's economic sectors in Q1. The rate for last year's corresponding period stood at 0.3%.

The significant boost in agricultural production owes largely to abundant rainfall at the beginning of the year, which led to increased crop yields.

"Growth in the agriculture sector has saved the Iranian economy over the past two years," says the caretaker of Agriculture Ministry, Abbas Keshavarz.

According to former agriculture minister, Mahmoud Hojjati, Iran meets 85% of its demand for agricultural products domestically and the remaining 15% are provided through imports.

Around $80 billion worth of agricultural products are produced in Iran every year, $75 billion of which are consumed domestically.

Director General of the Ministry of Industries, Mining and Trade's Food, Medicine and Toiletries Industries Department Mehdi Sadeqi Niyaraki said 95% of Iran’s food industry are owned by the private sector, noting that the sector accounts for 15% of the country’s industrial employment.

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 the Statistical Center of Iran.

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

The fiscal 2017-18 growth has been put at 3.7% by both CBI and SCI.

Parliamentary Think Tank's Forecast

The research arm of the Iranian Parliament has forecast a 1.8% economic growth for the country in the current fiscal year (March 2019-20) without taking oil production into account.

Majlis Research Center forecasts put the economic growth of agriculture sector at 5.5%, industries at 1.5%, mining at 7.5%, water, electricity and gas at 10%, construction at 14.5% and services sector growth at -1.5%.

The negative economic growth of services sector will be due to the decline in the government’s operating expenses and the added value of financial brokerage sector, particularly that of banks, the think tank says.

All in all, economic growth in the current fiscal year is predicted to be negative, but the performance of Iran’s non-oil economy would be better than last year (March 2018-19), Majlis Research Center concluded.

The main reason behind the current year’s negative economic growth is the negative growth of oil sector.