The “industries and mines” group registered the highest economic growth (based on the prices of the year ending March 2012) in the first half of the current fiscal year (March 20-Sept. 21) of 5.4%, the Central Bank of Iran reported.
The services group contracted 0.2% in H1 to post the sharpest decline among economic groups.
A breakdown of economic growth rates also shows that the sectors of agriculture and oil expanded by 4.4% and 0.8% respectively.
Within the “industries and mines” 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.
All in all, economic growth, excluding oil, stood at 1.4% and increased by 1.3% when factoring in oil sector in the six months under review compared with the same period of last year.
Gross fixed capital formation declined by 0.6% during the period under review. GFCF includes the sectors of “machinery” and “construction” that registered a -3.3% and 0.3% growth, respectively.
The private final consumption expenditures declined by 2.6% but final consumption expenditures by government increased by 4.1% in the first half.
Using constant prices, exports and imports of goods and services decreased by 20.6% and 37.7% over the period, respectively, the central regulator said.
Bloomberg’s Take
It’s unclear whether the calculation accounts for inflation, which soared more than 30 percentage points to 41% in 2019, according to the International Monetary Fund.
The period under review coincides with the first half of the Iranian year that started on March 21, reads a Bloomberg article. Below is the full text:
Ill-equipped to effectively manage or control its virus outbreak, Iran eased its first lockdown in the first week of April, well ahead of most other countries, in an effort to keep its economy afloat.
The Islamic Republic has tried to develop its domestic manufacturing base and services sector as part of a broader national policy of building a “resistance economy” that is less dependent on oil and better-shielded from US sanctions imposed by US President Donald Trump.
The policy also includes a drive to increase non-oil exports to regional neighbors after Trump’s campaign to crush the Iranian economy sent the value of the rial plummeting and caused output to contract by 6.5% in 2019.
In October, the IMF forecast that Iran’s real economy would shrink by 5% by the end of 2020, making it the second-best performing oil exporter in the Middle East after Qatar. The lender also predicted that of the oil-exporting countries in the Middle East and North Africa region, Iran and Algeria would make the strongest recovery, both growing by 3.2% in 2021.
Earlier on Sunday, Iran set out ambitions to raise oil production next year, assuming that President-elect Joe Biden will loosen US sanctions after he takes office.
Oil Minister Bijan Namdar Zanganeh told lawmakers on Saturday that Iran planned to export 2.3 million barrels a day from March 2021, compared to just 133,000 according to the latest data compiled by Bloomberg. Almost all of Iran’s shipments go to China.
Iran’s oil revenues, once its single-largest source of foreign currency, has nosedived since Trump withdrew from the 2015 nuclear deal and imposed sanctions.
Biden has said he wants to bring the US back into the accord and lift penalties, if the Islamic Republic also returns to full compliance with the agreement.
CBI-SCI Discrepancies
The CBI report came after the Statistical Center of Iran said Iran’s gross domestic product saw a contraction of 1.9% in H1. Economic growth, excluding oil, stood at -1.3%, according to the SCI.
A sectoral breakdown of growth rates in the report shows that only the “agriculture” and “industries and mines, excluding oil” sectors experienced a growth of 1.7% and 2% respectively. The “industries and mines” contracted by 0.7% and “services” sector contracted by 3.5%.
SCI also reported economic growth in the second quarter of the current year (June 21-Sept. 21): Iran’s GDP expanded by a meager 0.2% in Q2 while it shrank by 0.2%, excluding oil sector. The “agriculture” sector saw a 2.7% expansion; “industries and mines” 4% while “industries and mines sector, excluding oil” expanded by 4.2%. The “services” sector, however, contracted by 3% in Q2.
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) compared with 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 measly rate of 0.1%. The industries and services sectors contracted by 4.4% and 3.5% respectively.
Iran’s economy shrank by 6.9% in the last fiscal year (March 2019-20). Excluding the oil sector, the rate stood at -0.5%.
Only the agriculture sector experienced growth with 2.8% last year. The sectors of industries and services saw contractions of 14.7% and 0.7%, respectively.
However, the Central Bank of Iran has come up with different numbers.
According to CBI Governor Abdolnasser 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 3.8% growth, and the industries and mines 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 also put Q1 economic growth, excluding oil production, at -0.6%.
“Iran’s economy is recovering from the pandemic shock. Compared with sanctions-free countries that only had to deal with the coronavirus, Iran’s economic performance is promising,” he added.
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. It shrank by -0.6%, without taking oil production into account.
The sectors of "industries and mines" 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 mine" registered 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 the growth of "industry" and "agriculture" at -9.6% and -1.5% respectively and services at 0.02%. The center put that year's growth, without oil, at -2.4%.
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 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.
CBI has put 2016-17 growth at 12.5%, while SCI says it was much lower and near 8.3%.
