The International Monetary Fund is expecting Iran’s economy to grow by 3% in 2022.
In a new World Economic Outlook report titled “War Sets Back Global Recovery”, IMF say the country’s economy expanded by 4% in 2021. Its predictions for 2023 and 2027 are at 2%.
The IMF has put Iran’s 2014-20 GDP growth at 5%, -1.4%, 8.8%, 2.8%, -2.3%, -1.3% and 1.8% respectively with the 2004-13 average at 2.5%.
“Global economic prospects have worsened significantly since our last World Economic Outlook forecast in January. At the time, we had projected the global recovery to strengthen from the second quarter of this year after a short-lived impact of the Omicron variant. Since then, the outlook has deteriorated, largely because of Russia’s invasion of Ukraine — causing a tragic humanitarian crisis in Eastern Europe — and the sanctions aimed at pressuring Russia to end hostilities,” reads the report’s introduction.
“Beyond the immediate humanitarian impacts, the war will severely set back the global recovery, slowing growth and increasing inflation even further. This report projects global growth at 3.6% in 2022 and 2023 — 0.8 and 0.2 percentage points lower than in the January forecast, respectively. The downgrade largely reflects the war’s direct impacts on Russia and Ukraine and global spillovers.”
The growth forecast for Iran in 2022 is higher compared to IMF’s previous estimate.
The “Recovery During a Pandemic” report had forecast GDP growth to decline slightly to 2% in 2022 from 2.5% in 2021 (the latter has also been revised up).
World Bank: Iran’s Economy to Grow 3.7% in 2022
The new IMF report came shortly after the World Bank once again revised up its forecast about Iran’s economic growth in 2022.
In a new report titled “Reality Check: Forecasting Growth in the Middle East and North Africa in Times of Uncertainty”, the bank expects the economy to grow by 3.7% this year.
The MENA economic update 2022 report’s forecast is 1.3 percentage points higher than that in the previous report published by World Bank in January.
The January report expected Iran’s economy to grow 2.4% in 2022, 0.2% more than the bank’s June 2021 projection.
"Growth in the Islamic Republic of Iran in 2022 has been revised marginally higher with tapering Covid-19 mobility restrictions benefiting the services sector and a gradual recovery in the oil sector,” read the previous report.
“In the Islamic Republic of Iran, the pandemic’s impact on the services sector was limited and oil production and industrial activity rebounded, minimizing the slowdown in economic growth.”
According to the new report, Iran’s GDP is estimated to have expanded by 3.4% in 2021.
The Global Economic Prospects report published in January had estimated the economy to have expanded 3.1% in 2021, 1% more than previously estimated.
The new report’s forecast for 2023 is at 2.7% compared to 2.2% in the January report, which was 0.1% less than what had been previously expected.
The World Bank’s forecasts about Iran’s real GDP per capita growth are at 2.5% and 1.5% in 2022 and 2023 respectively. 2021 estimate is 2.8%.
“Uncertainty is again clouding the prospects for the global economy. The unexpected war in Europe presents significant challenges to the world economy and to the Middle East and North Africa [MENA] region in particular. This shock has rippled across global commodity and capital markets during a time when uncertainty was already obscuring the economic prospects of the region. Chief among the sources of uncertainty that predate the war in Ukraine was the scientific uncertainty about the evolutionary path of the virus that causes Covid-19. The global scientific community is being tested by the prospects of future outbreaks and the severity of a disease that seems likely to mutate further,” reads the opening of the new World Bank report.
“Like the rest of the world, the MENA region faces considerable uncertainty that stems not only from possible future Covid-19 variants, inflation and the recent conflict in Ukraine, but also from a tightening of global monetary policy. The World Bank forecasts that economic growth in the region will be 5.2% in 2022, although that could end up being optimistic, as has been the pattern over the past decade. In the current context, rising oil prices are likely to contribute to uneven outcomes, improving prospects for oil exporters while lowering expected growth rates for oil importers. Inflationary pressures from supply-chain disruptions present additional downside risks.”
Domestic Reports
The Central Bank of Iran’s latest report on the country’s GDP says the economy grew by 4.1% in Q1-3 of last fiscal year (March 21-Dec. 21, 2021) compared with the preceding year’s corresponding period.
According to CBI, GDP growth stood at 3.4% without taking into account crude oil production during the period under review.
Oil saw the biggest growth of 11.7% among main economic sectors surveyed by the bank.
The CBI data further show “services” sector expanded by 6.5%, “industries and mines” registered zero growth and “agriculture” contracted by 2.1%.
The central bank report came shortly after the Statistical Center of Iran said the economy grew by 5.1% during the same period (Q1-3), adding that without taking into account the growth in oil sector, GDP grew by 3.8%.
According to SCI, “agriculture” contracted by 3.9%, “industries and mines” grew by 7.1% and “services” expanded by 5.1%.
The subsectors of “industries and mines”, namely “crude oil and natural gas extraction”, “other mines”, “industry”, “energy” and “construction” saw 13.4%, -2.5%, 3.4%, 5.1% and 6.3% growth.
According to CBI, Iran’s gross domestic product in the last fiscal year (March 2020-21) saw 3.6% growth while growth, excluding oil, expanded by 2.5%.
According to SCI, GDP in the last fiscal year expanded by 0.7% compared with the year before. Economic growth, excluding oil, was near zero.
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 the fiscal 2019-20 and GDP shrank by -0.6%, without taking oil production into account.
This is while CBI put fiscal 2019-20 growth at -6.5%. Excluding the oil sector, growth was put at 1.1%.
Iran's gross domestic product shrank by 4.9% in the fiscal 2018-19 compared to the year before, according to SCI. The center put that year's growth without taking oil production into account at -2.4%.
The CBI did not release any report of fiscal 2018-19 economic growth.
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.
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%.
