SCI Reviews Iranian Economy for Second Fiscal Quarter

EghtesadOnline: The Statistical Center of Iran’s new report reviews Iran’s economy in the second quarter of the current fiscal year (June 21-Sept. 21).

News ID: ۷۸۵۷۰۳

04 January 2021

Highlights of the report followed by more details culled from the center’s earlier report are as follows:

1. Gross domestic product (when constant prices of the year ending March 2012 are used) stood at 1,798,755 billion rials (about $70 billion) in Q2, indicating a 0.2% growth compared with the corresponding period of last year. Economic growth, excluding oil, saw a 0.2% decline.

The agriculture sector saw a 2.7% expansion; industries and mining grew by 4% while industries and mining sector, excluding oil expanded by 4.2%. The services sector, however, contracted by 3% in Q2.

2. The average goods and services Consumer Price Index (using the Iranian year to March 2017 as the base year) reached 236, indicating a 26% increase during the 12-month period to Sept. 21 year-on-year.

3. The unemployment rate of the population above 15 years old was 9.5%, registering a 0.3 percentage point decline compared with Q1 (March 20-June 20.)

SCI put Q1 labor force participation rate—the proportion of the population of ages 15 and above that is economically active either employed or looking for job—at 41.8%, registering a 3.1% decrease year-on-year.

Employment is defined as persons of working age engaged in any activity to produce goods or provide services for pay or profit, whether at work during the reference period or not at work due to a temporary absence from work, or to working-time arrangement.

The total number of Q2 employed population was 23.54 million, down 1.21 million compared with the same quarter of last Iranian year.

The services sector employed 48.1% of the Iranian employed population, whereas industrial and agricultural sectors provided 33.4% and 18.5% of jobs respectively.

The center provides two figures for the youth unemployment rate: the proportion of the population between 15 and 24 years and those between 18 and 35 years.

The youth unemployment rate of those between 15 and 24 years stood at 23.1% in Q2, posting a 3% decrease while the unemployment rate of those between 18 and 35 years stood at 16.9%, posting a decline of 1% YOY.

Underemployment, the condition in which people in a labor force are employed for less than 44 hours of service per week, stood at 9.3% of the employed population, while 36% worked more than 49 hours per week.

The outbreak of coronavirus and its associated challenges has had a significant impact on Iranians in terms of labor force participation.

The decline in Q2 labor force participation rate (3.1%), despite a drop in unemployment rate, was also the case in the first quarter of the current fiscal year (March 20-June 20).

Labor force participation fell by 3.7% to 41% (or 25.46 million people) in Q1. Men’s and women’s economic participation rates were 67.9% and 14.1% respectively in the same period.

According to SCI, 21.07 million men and 4.39 million women of ages 15 and above were economically active in Q1, i.e., they were either employed or looking for job.

“A total of 2.76 million people (1.3 million men and 1.46 million women) were added to the number of inactive labor force in the first quarter; 14.8% of the employed population and 37.2% of unemployed population of the same period of last year were added to the population of people outside the labor force this year,” says Javad Hosseinzadeh, the head of SCI.

These individuals aren’t included in unemployment calculations, which only capture people who are looking for work. This means that the fall in labor force participation is caused by people not searching for work, chiefly due to the outbreak of coronavirus, and consequently a decline in unemployment rate.

Iran’s unemployment rate, which is calculated by dividing the number of unemployed people by the total number in labor force, then multiplying by 100 stood at 9.8% in Q1, indicating a 1.1% decline compared with the same period of last year. A total of 2,505,336 Iranians were unemployed in Q1.

"A decline in unemployment rate isn’t necessarily a sign of an improving economy. When people stop looking for jobs and drop out of the labor force, the unemployment rate will decline even though the true employment situation hasn’t improved. For an economy to run satisfactorily, the decline in unemployment rate must couple with an increase in both economic participation and employment rates," the SCI chief said.

Hosseinzadeh referred to an unprecedented decline in average working hours due to the pandemic and said the average working hours have decreased from 45.8 hours per week in Q1 of last fiscal year to 40.4 hours per week this spring.

“Generally, during the first quarter of the current year, 56.1% of the employed population worked 44 or more hours per week and 36.7% put in fewer than 44 hours while 7.2% were temporarily absent from work,” he said.

The official said out of 20 groups that economic activities are divided into, only five groups reported an increase in their employed population in Q1 compared with last year’s similar period.

“The highest increase in the number of employees was posted for healthcare and social workers, and the sharpest decline was registered in the fields of agriculture, industries and manufacturing, retail and wholesale, transportation, education as well as hotels and restaurants,” he added.

4. A total of 52,377 building permits were issued for urban areas in Q2, indicating a 26.8% growth compared with the same period of last year.

5. Money supply increased 17.1% compared with the end of last fiscal year (March 19, 2020) to reach 28,958 trillion rials during the period ending Sept. 21.

6. Iran’s TEDPIX stock market index reached 1,595,160 in Q2, indicating a 25.5% growth YOY.

7. Q2 exports were worth $7,220 million, indicating a 24.4% decline YOY. Imports were worth $9,306 million, indicating a 14% decline YOY.

8. The average exchange rate of the US dollar and the euro were 225,978 rials and 259,530 rials, respectively, posting a 36.6% and 44.3% growth compared with the previous quarter.