Originally published 20th June 2017
According to the recent report of the Central Bank of Iran, Iran's economy grew 12.5% during April 2016 - March 2017 in comparison to the previous year, under an OPEC deal with the aim of eroding global inventories and lifting crude prices.
Following the lifting of international sanctions against Iran in January 2016, oil production is allocated the largest share of economy growth. The CBI announced 61.6% growth in the oil sector during last year. Also noted that without taking oil production into account, the GDP growth stood at 3.3%.
Iran's crude oil output reached to 3.8 million barrels per day as of the end of the preceding fiscal year from 3 million barrels per day in the previous year, according to the government data. During sanctions, crude oil production reduced to 2.5 million bpd. Also exports of crude were limited to around 1 million bpd and to a few Asian buyers.
During the fiscal year 01.04.2016 - 31.03.2017, Iran exported approximately 400,000 bpd of oil by-products to customers in the Middle and Far East. This rate in the previous year was around 220,000 bpd.
According to the National Iranian Oil Products Distribution Company's report, exports of oil by-products are expected to reach to 600,000 bpd in the current fiscal year.
The CBI also reported growth in industry sector up to 6.9% during previous year compared to the 4.6% contraction registered a year before. The CBI indicated the following:
- Agricultural sector has expanded production by 4.2%
- Government sector recorded 3.8% growth
- Private consumption reported 3.7% growth
- Gross fixed capital formation contracted by 3.7%
- Exports of goods and services grew 41.3%
- Imports of goods and services recorded a 6.1% growth
- The only sector that contracted previous year and registered a -13.1% growth was construction sector
According to the Statistical Center of Iran (SCI)'s report released late May and before the report of the CBI, last year's growth has announced 8.3% and without taking the oil sector into consideration, the economic growth has estimated 6.3%.
The SCI also reported growth in the following sectors:
- Agriculture sector grew by 5%
- Industry sector including mines, manufacturing, energy and construction, expanded by 11.3%
- Services sector registered a 7.1% growth
Different figures between CBI and SCI periodical reports is because they use different base years for calculation of data.
According to the CBI, Iran's economy grew by 3% during the fiscal year 01.04.2014 - 31.03.2015, after two years of recession when the economy contracted 5.8% and 1.9% back to back.
Statistical report from CBI pointed growth of -1.6% for the fiscal year 01.04.2015 - 31.03.2016, while SCI reported 0.9% growth for the same period.
As stated by The World Bank's Economic Monitor, Iran's economy growth is estimated to reach 6.4% in 2016, following a contraction of 1.8% in the preceding year. This report shows higher growth in the mining, manufacturing, services and agriculture sectors.
Also, the report noted that in the medium-term growth prospects are expected to be modest because of close capacity oil production and non-oil sector's weak activity. It continued by saying that this will lift just by improving the foreign direct investment, reconnecting to the international banking system and making further progress in implementing national reforms.
"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%" The International Monetary Fund said in its recent World Economic Outlook.
As a result of its well rooted experience in Middle East countries, including Iran, Shanda Consult maintains a strong local presence and an effective network in Iran.
Our firm offers various services to mainly Germany and Chinese investors in Iran, from seminars for Ministries to the facilitation of Foreign Direct Investment into Iran, from intercultural communication coaching for Joint Venture partners to market surveys and project implementation in Iran.
For a personalized consultation for your business investment needs, please feel free to contact us.
Source: Financial Tribune
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.