World Bank Places Iran Among Upper Middle-Income Economies

EghtesadOnline: The World Bank has incorporated Iran into the group of upper middle-income economies in 2019.

News ID: ۷۵۱۴۹۶

16 November 2020

According to a report by Tehran Chamber of Commerce, Industries, Mines and Agriculture citing the World Bank data, economies are currently divided into four income groupings: low, lower middle, upper middle and high.

Income is measured using gross national income (GNI) per capita, in US dollars, converted from the local currency using the World Bank Atlas method. Estimates of GNI are obtained from economists in World Bank country units and the size of the population is estimated by World Bank demographers from a variety of sources, including the UN’s biennial World Population Prospects.

Countries are immediately reassigned on July 1 each year, based on the estimate of their GNI per capita for the previous calendar year. Income groupings remain fixed for the entire fiscal year (i.e., until July 1 of the following year), even if GNI per capita estimates are revised.

For the fiscal 2020-21, low-income economies are defined as those with a GNI per capita, calculated using the World Bank Atlas method, of $1,035 or less in 2019; lower middle-income economies are those with a GNI per capita of between $1,036 and $4,045; upper middle-income economies are those with a GNI per capita of between $4,046 and $12,535; high-income economies are those with a GNI per capita of $12,536 or more.

The population of Iran in 2019 was 82.91 million, marking a 1.36% increase from 2018, which makes it the 19th populous country in the world.

Iran’s gross national income per capita in 2019 stood at $5,420, registering a 1% decrease from 2018, to rank 103rd among world economies.

Purchasing power parities (PPPs) are the rates of currency conversion that try to equalize the purchasing power of different currencies, by eliminating the differences in price levels between countries.

The basket of goods and services priced is a sample of all those that are part of final expenditures: final consumption of households and government, fixed capital formation and net exports. This indicator is measured in terms of national currency per US dollar.

Iran’s purchasing power parity was $14,560 in 2019 and the country ranked 93rd in the world. PPPs of economies with similar population, namely Turkey included in upper middle-income economies and Germany in high-income economies, were respectively 1.9 times and four times larger than Iran’s.

From 1987 to 2019 (33 years,) Iran was included among lower middle-income economies for 19 years and among upper middle-income economies for 14 years. Since 2009, Iran has been placed among upper middle-income economies.

Four neighboring countries, namely Qatar, the UAE, Saudi Arabia and Kuwait, were among top 30 countries in terms of GNI per capita.

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

In its June edition of Global Economic Prospects report, 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 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.