H1 GDP Growth Reaches 5.9%: SCI

EghtesadOnline: New data released by the Statistical Center of Iran show the economy grew by 5.9% in the first half of the current fiscal year (March 21-Sept. 22) compared with last year’s corresponding period.

News ID: ۷۸۷۴۰۰

11 December 2021

Excluding crude oil production, GDP growth stood at 4.1%.

A sectoral breakdown of GDP indicates “industries and mines” expanded by 9.5%. The subsectors of “crude oil and natural gas extraction”, “other mines”, “industry”, “energy” and “construction” registered a respective growth rate of 18.3%, -1.9%, 3.8%, 8.2% and 7%.

The services sector grew by 4.8% while agriculture contracted by 4.3%.

According to SCI, the economy registered a 7.6% year-on-year growth in the first quarter of the current fiscal year that started on March 21.

The “industries and mines” and “services” grew by 13.8% and 4.5% respectively, while agriculture contracted by 4.5%, according to a new report posted on the SCI website.

The center noted that GDP growth, excluding the oil sector, stood at 4.6% in Q1 (spring).

The SCI report came shortly after the Central Bank of Iran reported that the Iranian economy grew by 6.2% in Q1.

According to a new report published on the bank’s website, except for the drought-hit agriculture with -0.9%, all economic sectors experienced growth during the period (spring): oil with 23.3%, industries and mines with 2.1% and services with 7%.

Noting that services showed distinct signs of recovery after it was hit hard by the Covid-19 pandemic in the first quarter of last year (registering a -2.5% growth), the report attributed the expansion mainly to the subsectors of “transportation and warehousing”, “health and social work”, “wholesale, retail and auto repair”, “information and communications”, and “professional, scientific and vocational”.

The report added that growth, excluding the oil sector, stood at 4.7% in Q1.

According to CBI, the economy also expanded in the fiscal 2020-21.

Iran’s gross domestic product in the last fiscal year (March 2020-21) saw a 3.6% growth, according to an earlier report.

Economic growth, excluding oil, expanded 2.5%, it added.

According to SCI, last fiscal year’s GDP expanded by 0.7% compared with the year before.

Economic growth, excluding oil, saw an economic growth of near zero.

The center’s sectoral breakdown of growth rates shows that the agriculture, and industries and mining sectors experienced a growth of 3.5% and 4.2% during the period. The services sector contracted by 2% in the fiscal 2020-21.

Discrepancies were also evident in SCI and CBI reports on Iran's economic growth in the fiscal 2019-20.

According to SCI, the Iranian economy experienced a -7% contraction in the fiscal 2019-20, as the GDP shrank by -0.6% excluding oil production.

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

This is while CBI put fiscal 2019-20 growth at -6.5% which, excluding the oil sector, reached 1.1%.

According to the bank, the oil sector shrank by a whopping 38.7% amid sanctions on Iran's oil sales.

The sectors of “agriculture” and "industries and mine" saw a respective growth of 8.8% and 2.3%, while “services” contracted by 0.2%, as per CBI’s account.

Iran's gross domestic product shrank by 4.9% in the fiscal 2018-19 compared to the year before, according to SCI, with production of the two groups of "industry" and "agriculture" at -9.6% and -1.5% respectively and “services” marking a 0.02% growth. The center put that year's growth, excluding oil production, at -2.4%.

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

Iran’s economy emerged from recession in the fiscal 2014-15 with a 3% growth after two years of recession when the economy contracted by 5.8% and 1.9% back to back, according to the Central Bank of Iran.

IMF, World Bank Forecasts

The International Monetary Fund expects Iran’s economy to grow 2.5% in 2021.

IMF’s new World Economic Outlook report titled “Recovery During a Pandemic” forecasts GDP growth to decline slightly to 2% in 2022.

The fund’s estimate for 2020 growth is at 3.4%.

“The global recovery continues but the momentum has weakened, hobbled by the pandemic. Fueled by the highly transmissible Delta variant, the recorded global Covid-19 death toll has risen close to 5 million and health risks abound, holding back a full return to normalcy. Pandemic outbreaks in critical links of global supply chains have resulted in longer-than-expected supply disruptions, further feeding inflation in many countries. Overall, risks to economic prospects have increased, and policy trade-offs have become more complex,” reads the opening of the report.

“Compared to our July forecast, the global growth projection for 2021 has been revised down marginally to 5.9% and is unchanged for 2022 at 4.9%. This modest headline revision, however, masks large downgrades for some countries. The outlook for the low-income developing country group has darkened considerably due to worsening pandemic dynamics. The downgrade also reflects more difficult near-term prospects for the advanced economy group, in part due to supply disruptions. Partially offsetting these changes, projections for some commodity exporters have been upgraded on the back of rising commodity prices. Pandemic-related disruptions to contact-intensive sectors have caused the labor market recovery to significantly lag the output recovery in most countries.”

The IMF report noted that a dangerous divergence in economic prospects across countries remains a major concern.

“Aggregate output for the advanced economy group is expected to regain its pre-pandemic trend path in 2022 and exceed it by 0.9% in 2024. By contrast, aggregate output for the emerging market and developing economy group [excluding China]) is expected to remain 5.5% below the pre-pandemic forecast in 2024, resulting in a larger setback to improvements in their living standards.”

The new IMF report also expects the inflation rate in Iran to reach 39.3% in 2021 and drop to 27.5% in the following year.

IMF’s forecast for the unemployment rate in Iran is at 10% in 2021 and 10.5% in 2022.

Furthermore, it expects the current account balance of the country to stand at 1.3% and 1% of GDP in 2021 and 2022 respectively.

The IMF report came shortly after the World Bank revised up its estimates and forecasts about Iran’s economic growth.

In a new report titled “Overconfident: How Economic and Health Fault Lines Left the Middle East and North Africa Ill-Prepared to Face Covid-19,” the bank has put its 2021 expectation for Iran’s GDP growth at 3.1% - 1% more than its previous forecast.

The revised-up 2022 forecast is now at 2.4% - 0.2% more than previously expected.

According to the MENA economic update of the October report, the Iranian economy grew by 3.4% in 2020. Previously, the World Bank said it grew by 1.7%.

Iran’s economy saw a 6% and 6.8% contraction in 2018 and 2019 respectively, the bank says.

Real GDP per capita growth is forecast to hit 1.8% and 1.2% in 2021 and 2022 after having experienced a 2.1% expansion in 2020 and 8% contraction in 2019, the report shows.

This is the second time the World Bank is revising its estimates and forecasts about Iran’s economy. The first time was in June.