Tehran Chamber of Commerce, Industries, Mines and Agriculture has recently released a report on the economic outlook of Tehran Province.
Below are some of the findings of the report:
With an area of 13,500 square kilometers and a population of 13.97 million, Tehran ranks 29th in terms of area but first in terms of population among Iran’s 31 provinces.
Tehran’s urbanization rate stands at 94.3%, while the average rate is 75.4% for the country. Tehran Province ranks second after Qom in terms of urbanization.
With the exception of unemployment, other labor market components are not favorable compared to the country’s average rates. The employment rate in Tehran stands at 36.9%, which is relatively too low.
The services sector has the biggest share in Tehran’s labor market while agriculture only accounts for 1.5% of the market. The industrial sector’s share in Tehran Province and the country are almost similar.
Although nominal Gross Domestic Product of Tehran grew by 800% during March 2011-21, the share of the province from Iran’s GDP has remained the same. In the fiscal 2020-21, Tehran’s share in Iran’s GDP stood at 22.4%, which is almost equal to that of the fiscal 2017-18 (22.5%). The province’s highest GDP share was registered in the fiscal 2015-16 with 23.8%.
Tehran’s services play a major role in the country’s GDP. Notably, the province accounts for 79% of Iran’s GDP from “information and communications” and 65% from “finance and insurance”. However, it accounts for only 0.7% and 4.4% of “mine extraction” and “agriculture”. In the fiscal 2020-21, Tehran’s share of the country’s GDP in “electricity and gas supplement” became bolder and increased by 9.4 percentage points to 16.8%.
The services, by a wide margin compared to other sectors, creates the highest GDP (72%) in the province. One of the most important reasons behind the sector’s high share in GDP is the concentration of public services in the province, as the capital city is home to a vast number of buildings in urban areas which, in turn, leads to a relatively high share of real estate, retail and wholesale services.
Real estate, wholesales and retails, as well as finance and insurance together account for 46% of Tehran’s total GDP and 64% of that of its services sector.
The shares of construction and building in Tehran Province’s GDP stand at 15.7% and 4.7% respectively, lower than the country’s average of 18.6% and 5%.
“Petroleum products”, “food industry”, “rubber and plastic products” and “medicine” have an aggregate share of about 52% from the province’s total GDP.
In the first eight years of the past decade (March 2011-21), the general trend of Tehran Province’s real GDP growth was upward, similar to that of the country. With the intensification of sanctions in the fiscal 2018-19 along with the Covid-19 lockdowns in the past two years, the country’s production was affected, although the two factors’ impact on Tehran’s GDP was less intense compared to that on the country’s GDP in the fiscal 2018-19 and fiscal 2019-20.
However, in the fiscal 2020-21, this trend was reversed as the impact on the province grew larger while it subsided for the country nationwide. Tehran Province’s real GDP stood at 1.76 quadrillion rials ($6.4 billion) almost unchanged compared to the figure in the fiscal 2017-18.
The general trend of Tehran Province’s GDP growth over the past decade (fiscal 2011-12 to 2020-21) was positive as the average annual growth in this period stands at about 2.3%. The figure is higher than the average annual growth of 0.3% registered nationwide.
Compared with the economic growth of the country, except in the fiscal 2017-18 and 2018-19, the trends registered for both the country and the province were aligned. This is while the recession period in the province was shorter and between fiscal 2016-17 and 2018-19 grew at a faster pace compared with the country’s average.
In the fiscal 2019-20, the provincial growth stood at -0.03%, while the country’s economy grew by 1%.
During the decade under review, “water and electricity”, with an average annual growth of 15.4%, had the highest average GDP growth.
The rate for “accommodation and food services” declined by 9.9% annually. This group had the highest decline (-62%) in the fiscal 2020-21 and the main reason behind the decline was the impact of Covid-19.
