Iran Q1 Economic Growth at 6.5%

EghtesadOnline: Iran's gross domestic product during the first quarter of the current Iranian year (started March 2) stood at 1.8 quadrillion rials ($47 billion), indicating a 6.5% rise compared with last year's corresponding period.

News ID: ۷۷۹۰۷۹

11 September 2017

The Statistical Center of Iran also reported on its website on Wednesday that GDP was at 1.4 quadrillion rials ($37.5 billion) exclusive of oil, meaning non-oil sectors of the economy grew 7% as the oil sector expanded by 4.6% in spring compared with the first quarter of the previous fiscal year.

The sectors of agriculture (fishing, forestry, husbandry and farming), industry (oil & gas extraction, mining, energy and construction) and services (hospitality, retailing, transportation, communications, education and health) stood at 3.1%, 4.9% and 8.3% respectively.

The growth in oil sector is considerably dwarfed by remarkable expansions recorded after the removal of international sanctions against Iran over its nuclear energy program. Last year (March 2016-17), oil production expanded by a staggering 61.6%, Financial Tribune reported.

The removal of sanctions as of January 2016, as part of a deal Tehran signed with world powers a year earlier, allowed Iran to significantly boost its oil production, which fell drastically during sanctions.

Government data show Iran’s crude oil production reached 3.8 million barrels per day by the end of the last fiscal year from around 3 million bpd in the previous year.

Under sanctions, crude output fell to 2.5 million barrels daily and exports were limited to just above 1 million bpd to a few customers in Asia.

However, Iran is allowed to pump an average of 3.8 million bpd by March 2018 under an OPEC deal aimed at eroding global inventories and lifting crude prices.

On average, Iran exported 400,000 barrels daily, or 64 million liters per day, of oil byproducts to buyers in the Middle and Far East in the fiscal 2016-17, up from around 220,000 bpd in the previous fiscal year.

Outbound shipments of oil byproducts are expected to rise by 200,000 barrels a day to 600,000 barrels daily in the current fiscal year, according to a report by the National Iranian Oil Products Distribution Company.

However, as crude production is reaching the pre-sanction level, there is not much room left to see growth in this sector.

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 the Central Bank of Iran and 0.9% by SCI.

SCI and CBI both publish periodic statistics on Iran’s economy, but the two bodies’ data often differ, as they use different methods to calculate their data.

CBI has put 2016-17 growth at 12.5% while SCI declared it to be 8.3%.

The World Bank’s Economic Monitor report for the Middle East and North Africa region published recently showed Iran’s growth in 2016 reached 6.4%, following a 1.8% contraction in the previous year, resulting from higher growth in the mining, manufacturing, services and agriculture sectors.

It added, however, that growth prospects in the medium term are expected to be modest due to near capacity oil production and weak non-oil sector activity.

“The latter will not pick up unless FDI recovers, the economy reconnects with the international banking system and more progress is made in implementing domestic reforms,” the report said.

The International Monetary Fund in its latest World Economic Outlook said Iran growth is projected at 3.3% for 2017, which will rise to 4.3% in 2018. The fund put the country’s growth for 2016 at 6.5%.