H1 GDP Growth at 3.3%: Iran's CB

EghtesadOnline: Iran’s gross domestic product grew by 3.3% in the first half of the current fiscal year (March 21-Sept. 22) compared with last year’s corresponding period, the Central Bank of Iran reported on Tuesday.

News ID: ۷۸۷۴۸۱

22 December 2021

Putting the H1 GDP volume at 75,305 trillion rials ($251 billion at the exchange rate of 300,000 rials per dollar), the CBI says the economy expanded by 2.4%, excluding crude oil production.

The services and oil sectors grew by 5.7% and 15.1% respectively while agriculture contracted by 2% and so did “industries and mines” by 1.9%.

The CBI report came after the Statistical Center of Iran said the economy grew 5.9% in H1.

Excluding crude oil production, the GDP growth stood at 4.1%, according to SCI.

The center’s sectoral breakdown of GDP indicates that “industries and mines” expanded by 9.5%, as 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%. SCI noted that the services sector grew by 4.8% and agriculture contracted by 4.3%.

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) registered a 3.6% growth, according to an earlier report.

Economic growth, excluding oil, expanded by 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, SCI reported.

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 seen 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 fiscal 2019-20. 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%, and 1.1% after excluding the oil sector.

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 mines" saw a respective growth of 8.8% and 2.3%, as 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 "industries" and "agriculture" at -9.6% and -1.5% respectively and services at 0.02%. 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 had emerged from two years of recession in the fiscal 2014-15 with a 3% growth, 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%.

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 Iran’s GDP growth to decline slightly to 2% in 2022.

“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 tradeoffs 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 referred to dangerous divergence in economic prospects across countries and said, “Aggregate output for the advanced economy group is expected to regain its pre-pandemic trend 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. 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%, which is 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 for October, the Iranian economy grew by 3.4% in 2020. Previously, the World Bank said it grew by 1.7%.

Iran’s economy saw 6% and 6.8% contractions 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.