Q1-3 Economic Growth at 2.2%: CBI

EghtesadOnline: Preliminary estimates by the Central Bank of Iran show Iran’s gross domestic product in the first nine months of the current Iranian year (started March 20, 2020), using constant prices of the year ending March 2012, stood at 4,806 trillion rials ($19.37 billion) compared with 4,704 trillion rials ($18.96 billion) of the corresponding period of last year, registering a 2.2% year-on-year growth.

News ID: ۷۸۶۲۷۹

16 March 2021

Economic growth, excluding oil, expanded by 1.9% to reach 4,190 trillion rials ($16.89 billion) during the period under review, according to CBI.

The central bank’s sectoral breakdown of growth rates shows that “agriculture”, “oil” and “industries and mining” groups experienced a respective growth rate of 4.6%, 3.9% and 6%.

The services sector was the main laggard with a 0.3% contraction.

When constant prices are used, the agriculture sector generated 496 trillion rials ($2 billion), oil sector 615 trillion rials ($2.47 billion), and industries and mining sector 1,285 trillion rials ($5.18 billion). The services sector generated 2,551 trillion rials ($10.28 billion) during the period.

Construction, which is a subsector of “industries and mining” group, expanded by 3.6% to reach 233 trillion rials ($939.51 million).

Earlier, the Central Bank of Iran’s governor announced that Iran’s economy has come out of recession following two consecutive quarters of growth.

“The positive growth in the second quarter of the current fiscal year [June 21-Sept. 21, 2020] recurred in the third quarter [Sept. 22-Dec. 20, 2020],” Abdolnasser Hemmati also wrote in an Instagram post.

According to the CBI chief, Q2 saw Iran’s GDP rise 3.9% compared with the corresponding period of the year before.

Without taking into account oil production, growth stood at 2.9%. I can confidently say today Iran’s economy has weathered tough sanctions and the ensuing recession, as it is repositioned on the growth path,” he added.

He noted that the growth experienced by Iran’s economy is especially important, as the country has been grappling with maximum pressure from the US in recent years, apart from the Covid-19 pandemic.

Hemmati added that a detailed report on Iran’s GDP growth in the third quarter (fall) will be published within a week.

CBI-SCI Statistical Discrepancies

His account of GDP growth flies in the face of the Statistical Center of Iran’s Q3 growth estimate of 0.8% earlier this month.

Growth, excluding oil, was at 0.2% during the three-month period, according to SCI. Details of the center’s report show the “agriculture” sector saw a 5.5% expansion; “industries and mining” grew by 3.7% and “industries and mining sector, excluding oil” expanded by 3.1%. The “services” sector, however, contracted by 1.8% during the third quarter of the current year. “Construction”, which is a subsector of “industries and mining” group, expanded by 8.5%.

The SCI report also showed Iran’s gross domestic product contracted by 1.2% during the nine-month period leading to Dec. 20, 2020 (Q1-3) compared with the corresponding period of the year before.

Economic growth, excluding oil, registered a 1% decline, according to the center, while “agriculture”, “industries and mining”, and “industries and mining, excluding oil” sectors experienced a growth rate of 3%, 0.8% and 2.5% respectively. The services sector contracted by 3.3% and the construction subsector expanded by 3.9%.

The Statistical Center of Iran previously reported that Iran’s gross domestic product saw a contraction of 1.9% in the fiscal H1 (March 20-Sept. 21), which stood at -1.3%, excluding oil.

Only the “agriculture” and “industries and mining, excluding oil” sectors experienced a growth of 1.7% and 2% respectively. The “industries and mining” contracted by 0.7% and “services” contracted by 3.5%.

SCI also reported an economic growth in the second quarter of the current fiscal year (June 21-Sept. 21): Iran’s GDP expanded by 0.2% in Q2 while it shrank by 0.2%, without considering oil sector. The “agriculture” sector saw a 2.7% expansion, “industries and mining” 4% and “industries and mining sector, excluding oil” grew by 4.2%. The “services” sector, however, contracted by 3% in Q2.

However, the Central Bank of Iran reported that economic growth, excluding oil, stood at 1.4% and when factoring in oil sector, it increased by 1.3% in the first six months of the current fiscal year compared with the same period of last year.

“Economic growth, including oil sector, stood at -2.9% and 5.1% in the first and second quarters of the current year respectively,” Hemmati had said.

According to CBI, the “industries and mining” group registered the highest economic growth (when constant prices of the year ending March 2012 are used) in the first half of the current fiscal year (March 20-Sept. 21) with 5.4% while the services group contracted by 0.2% in H1 to post the sharpest decline among economic groups.

The CBI breakdown of H1 economic growth rates showed that the sectors of agriculture and oil expanded by 4.4% and 0.8% respectively. Within the “industries and mining” group, the mining subsector grew by 3.5%; “industry” by 6.7%; “electricity, natural gas and water” by 4.5% and “construction” by 4.1%.

Within the services group, the “commerce, restaurant and hoteliering” subsector contracted by 0.3%; “transportation, warehousing, and communications” shrank by 0.6%; “services by monetary financial institutions” expanded by 11.9%; “professional real-estate services” grew by 1.1%; “general services” contracted by 5.2%; and “social, personal and home services” shrank by 10.2% in H1.

According to SCI, gross domestic product saw a contraction of 3.5% during the first quarter of the current fiscal year (March 20-June 20, 2020) compared to the corresponding period of last year. Economic growth, excluding oil, stood at -1.7%.

A sectoral breakdown of growth rates in the report shows only the agriculture sector experienced growth with a paltry rate of 0.1%. The industries and services sectors contracted by 4.4% and 3.5% respectively.

However, the Central Bank of Iran came up with different numbers.

According to Hemmati, Iran's gross domestic product contracted by 2.8% during the first quarter of the current fiscal year (March 20-June 20) compared with the corresponding period of last year.

“A sectoral breakdown of growth rates shows the agriculture sector experienced a 3.8% growth, and the industries and mining sector expanded by 2.5%, but the services sector contracted by 1.6%, which was quite predictable following the outbreak of coronavirus and restrictions imposed to prevent the spread of the disease,” he wrote in an Instagram post.

Hemmati put Q1 economic growth, excluding oil production, at -0.6%. Iran’s economy is recovering from the pandemic shock. Compared with sanctions-free countries, which only had to deal with the coronavirus, Iran’s economic performance is promising, he had said.

Discrepancies were also seen in SCI and CBI reports on Iran's economic growth in the last fiscal year (March 2019-20).

According to SCI, the Iranian economy experienced a -7% contraction in the fiscal 2019-20.

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

The sectors of "industries and mining", and "services" saw a respective contraction of 14.7% and 0.3%. This is while the CBI governor put last fiscal year's growth at -6.5%. Excluding the oil sector, he put the growth at 1.1%.

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 mining" saw a respective growth of 8.8% and 2.3%, while services contracted by 0.2%, he added.

Iran's gross domestic product shrank by 4.9% in the fiscal 2018-19 compared to the year before, according to SCI, with those of "industries" and "agriculture" at -9.6% and -1.5% respectively and services at 0.02% growth. The center put that year's growth without taking oil production into account at -2.4%.

The CBI did not release any report on the fiscal 2018-19 economic growth.

Iran’s economy emerged from recession in the fiscal 2014-15 with a 3% growth after two quarters when the economy contracted by 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 SCI.

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