The International Monetary Fund has updated its projections about Iran’s economy in a new World Economic Outlook report.
It forecasts Iran’s real GDP growth to stick around 2% in 2023 and 2024, down from 2.5% last year.
The new report also expects inflation to decrease from 49% in 2022 to 42.5% this year and further to 30% in 2024.
Current account balance is forecast to drop from 4.7% last year of GDP to 1.8% this year and rise slightly to 1.9% next year.
Unemployment is forecast to rise from 9.5% in 2022 to 9.8% in 2023 and 10.1% in 2024.
IMF expects global growth to bottom out at 2.8% this year before rising modestly to 3% in 2024.
“Global inflation will decrease, although more slowly than initially anticipated, from 8.7% in 2022 to 7% this year and 4.9% in 2024,” reads the new report.
The IMF report came after the World Bank said it expected Iran’s economy’s growth to decelerate amid intensifying sanctions and decline in oil prices.
“Because of intensifying economic sanctions, Iran’s growth will likely remain at low levels. As oil prices decline, Iran’s GDP is forecast to grow 2% in 2023. This represents a deceleration from 2.7% growth in 2022, which was constrained by water and electricity shortages as well as political instability,” reads the new MENA Economic Update for April.
The report forecasts Iran’s GDP to decline further to 1.8% in 2024.
As for real GDP per capita, World Bank also expects the growth to decline from 3.9% in 2021 to 2% in 2022. It is forecast to drop to 1.3% in 2023 and further to 1% in 2024.
The World Bank forecasts Iran’s current account balance to decline from 3.8% of GDP in 2022 to 3.1% in 2023 and 2.3% in 2024.
Oil-Driven Growth
Much of recent economic growth registered in Iran owes to a surge in oil sales, as indicated by domestic reports.
Latest data released by the Central Bank of Iran show oil registered the highest growth among economic sectors during the first three quarters of last fiscal year (March 21-Dec. 21, 2022).
According to CBI, Iran’s gross domestic product grew by 3.7% during the period compared with the preceding year’s corresponding period.
Without taking oil production into account, the growth rate stood at 3.2%.
The economic sectors of “agriculture”, “oil”, “industries and mines”, and “services” registered 1.1%, 9.3%, 5.6% and 2.8% growth during the period respectively.
According to CBI, Q1, Q2 and Q3 rates stood at 2.2%, 3.6% and 5.3% respectively.
The central bank’s report came a few days after the Statistical Center of Iran put Q1-3 economic growth at 3.3%, saying without oil it stood at 2.9%.
According to SCI, the “industries and mines” and “services” groups registered 5.3% and 2.6% growth respectively, as “agriculture” contracted by 4.3%.
The broad “industries and mines” group has five sub-categories of “crude oil extraction”, “other mines”, “industry”, “energy” and “construction”, which registered 5.6%, 0.9%, 5.1%, 9.5% and -2.2% growth, the center said.
According to SCI, Q1 and H1 growth were at 5.3% and 3.6% respectively.
CBI Put Fiscal 2022-23 Inflation at 46.5%
Iran experienced 46.5% in average annual inflation in the last Iranian year that ended on March 20, according to the Central Bank of Iran.
CBI says the Consumer Price Index stood at 794.3 in the 12th month of the year, indicating a 6.6% rise compared to the previous month.
The bank did not report on the year-on-year inflation in the 12th month.
The bank surveys CPI for 12 groups of goods and services. Notably, the “food and beverages” group saw 54.6% in annualized inflation.
“Transportation”, “health and medical care”, “clothing and shoes”, “home appliances and services”, “communications”, “entertainment and cultural affairs”, “education”, “restaurant and hotel”, “tobacco”, “housing and utilities (water, electricity, gas and other fuel)” and “miscellaneous goods and services” registered 32.3%, 41.9%, 45.9%, 33.3%, 19.3%, 37.8%, 35.1%, 80%, 28.8%, 48.3% and 38.3% respectively.
“Housing and utilities” with 37.05%, “food and beverages” with 25.51% and “transportation” with 8.9% have the highest coefficient among the groups surveyed.
Unemployment at 9.7% in Q4: SCI
Iran’s unemployment rate, the proportion of the jobless population of ages 15 and above, stood at 9.7% in the fourth quarter of the previous Iranian year (Dec. 22, 2022-March 20), indicating a 0.3% year-on-year increase, according to a new report by the Statistical Center of Iran.
A total of 2.52 million Iranians were unemployed in Q4.
Men’s unemployment stood at 8.5% while the rate for women hovered around 15.7%.
Over 1.85 million men and 670,349 women of ages 15 and above were jobless in Q4.
The unemployment rate was 10.3% for urban areas (2.05 million people) and 7.9% for rural areas (473,818 people).
Non-Oil Trade Deficit
Latest statistics on trade released by the Islamic Republic of Iran Customs Administration show Iran traded around 150 million tons of goods worth $102 billion (excluding crude oil exports) during the first 11 months of last fiscal year (March 21, 2022-Feb. 19).
Trade registered a surplus of 77.7 million tons, but the value had a deficit of $4.9 billion.
Iran’s exports, excluding crude oil, stood at 111.3 million tons worth $48.8 billion during the period, registering a 1.16% fall in terms of weight, but a 12.22% rise in value year-on-year, according to Mohammad Rezvanifar, the head of IRICA.
The average value of each ton of exported products stood at $439 during the period, registering a 13.54% rise compared with $386 in the previous year’s corresponding period.
A total of $21.7 billion of petrochemicals were exported during the period, which accounted for 40.25% of the total exports’ weight and 44.49% of total exports’ value, IRNA reported.
The main exported product were liquefied propane with $6.8 billion, which accounted for 13% and 97% of the total exports’ weight and value, respectively.
China with $13.6 billion was Iran’s main export destination during the period, followed by Iraq with $9.4 billion, Turkey with $6.9 billion, the UAE with $5.3 billion and India with $1.9 billion.
Rezvanifar noted that these five countries accounted for 73.45% and 75.79% of the total exports’ weight and value, respectively.
Imports stood at 33.6 million tons worth $53.7 billion during the 11 months under review, registering an 8.61% decline in terms of weight, but a 15.28% rise value compared with the corresponding period of last year.
The average value of each ton of imported products during the period hit $1,597, registering a 26.14% increase compared with $1,266 in the same period of last year.
A total of 22.6 million tons of essential goods worth $17.8 billion were imported during the period to register a 16.42% decrease in terms of weight, but a 6.33% increase in terms of value YOY.
Essential goods accounted for 67.13% and 33.8% of the total imports’ weight and value, respectively.
Also known as necessity or basic goods, essential goods refer to products consumers will buy, regardless of changes in income levels.
Corn, rice, soybeans, wheat, sunflower oil, barley and soymeal were the main imports during the period, together accounting for 56.51% and 20.67% of the total imports’ weight and value respectively.
Import of cellphones stood at $2.6 billion to account for 4.85% of the total imports’ value.
The UAE with $16.5 billion was the main exporter to Iran during the period. China with $14.2 billion, Turkey with $5.6 billion, India with $2.6 billion and Germany with $1.8 billion came next. These five countries accounted for 65.18% and 75.77% of the total import’s weight and value, respectively.
