Iran's Non-Oil Economy Grew by 1.1% in Fiscal 2019-20

EghtesadOnline: The Iranian economy grew by 1.1% in the fiscal 2019-20, excluding oil, the governor of the Central Bank of Iran says.

News ID: ۷۵۰۲۴۹

15 June 2020

The GDP contracted by 6.5%, including oil, Abdolnasser Hemmati also wrote on his Instagram account.

According to Hemmati, 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%, as services contracted by 0.2%, he added.

His comments came a few days after the Statistical Center of Iran reported that the Iranian economy experienced a -7% contraction in the fiscal 2019-20.

According to the center, Iran’s GDP shrank by -0.6% without taking oil production into account.

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

The agriculture sector expanded by 3% during the period under the Statistical Center of Iran's review.

The World Bank expects Iran's economy to bounce back to growth in 2021 with 2.1% in GDP expansion, after experiencing an estimated 5.3% contraction this year.

In its June edition of Global Economic Prospects report, the World Bank has revised down its forecast for Iran's growth in 2020. The previous such report had estimated 0% growth in 2020.

However, the forecast for next year has been revised up as the previous report had forecast 1% growth in 2021.

According to World Bank, Iran experienced respective growth rates of -8.2%, -4.7% and 3.8% in 2019, 2018 and 2017.

"Iran’s GDP, which had already fallen in each of the previous two years, is expected to shrink again in 2020, by 5.3%, partly reflecting the effects of the large-scale Covid-19 outbreak on domestic consumption and the services sectors [e.g., tourism]," reads the latest report, adding that in many oil exporting countries, growth will be significantly constrained by renewed policy cuts in oil production.

"US-Iran tensions have not eased appreciably even as both countries attempt to cope with the effects of the pandemic," it goes on to read.

Iran's Ministry of Economic Affairs and Finance says the most biting challenges facing Iran's economy are the escalation of US sanctions and depletion of Iran’s foreign exchange reserves, combined with economic losses resulting from the coronavirus outbreak and business disruptions that would lead to leaner tax revenues.

Other challenges facing the economy, according to the ministry, include: the continued price decline in oil, petroleum products and petrochemicals due to the global recession; deepening recession in services sector due to the coronavirus pandemic; withering global demand for minerals and decline in metal prices; a decrease in consumption due to the shrinkage of people’s purchasing power; the government’s rising expenses due to the impacts of coronavirus and widening budget deficit in the fiscal 2020-21.