Since the fiscal 2018-19, due to high inflation and economic sanctions, the growth rate of investment in Iran has been negative and failed to keep pace with the depreciation rate. However, we have seen fluctuating economic growth and small momentum in several economic fields, Hadi Haqshenas, an economic expert, told the Persian newspaper Jahan-e Sanat in an interview.
The key point is that if there were no sanctions and Iran's economy followed its normal course, the economic growth would undoubtedly reach higher numbers than cited by the Central Bank of Iran, and Statistical Center of Iran, he added.
The expert said one of the reasons for the economic growth of the last two years is the rise in oil sales compared to the previous years.
“In the fiscal 2019-20 and 2020-21, the volume of oil sales reached its lowest level, while in the fiscal 2021-22 and 2022-23, Iran's oil sales were accompanied by growth. According to reports published by an international media outlets, Iran's oil sales now exceeds over 1.5 million barrels per day,” he said.
Iran’s economy grew by 4% in the last fiscal year that ended on March 20, the CBI said in June.
The growth rate was down by 0.4% compared to the previous year when it stood at 4.4%, according to the bank. Without taking into account crude oil production, GDP growth stood at 3.5% in the fiscal 2022-23, it added.
The CBI report came after the Statistical Center of Iran said the domestic economy grew by 4.8% in the fiscal 2022-23, unchanged compared to the previous year. SCI said the economy grew by 4.5%, excluding crude oil.
According to Haqshenas, the increase in oil sales in the last two years as well as this year is an important parameter that has had a positive impact on the economic growth rate. But the key point is that at the beginning and end of the decade ending 2022, the growth rate of investment was lower than the growth rate of depreciation.
“The oil sale and rise in the production of large industrial factories have had a great impact on increasing economic growth. When investment took place in the fiscal 2021-22 and 2022-23, the growth of investment in machinery and other sectors triggered a positive economic growth in the current fiscal year (started March 21), otherwise we cannot hope to see the current growth stabilize in the coming years,” he said.
Haqshenas noted that in the seventh five-year development plan, the economy is focused on achieving 8% annual growth, but what is important is the strategy adopted by the government to achieve this economic growth.
The economic expert says the economy can register sustainable growth provided that there is growth of investment in industrial, services and agricultural sectors.
The CBI’s sectoral breakdown of GDP shows the main groups of agriculture, oil, industries and mines, and services expanded by 1.1%, 10%, 6.5% and 2.7% in the last Iranian year.
According to SCI, the main groups of agriculture, industries and mines, and services saw 4.4%, 6.4% and 4.4% growth, respectively.
“If the growth of investment in these areas is higher than the growth rate of depreciation, we can expect the economic growth to continue and not just because of the sale of oil. Although the reports of CBI and SCI show that the economic growth was positive with and without oil, the continuation of this situation requires a better growth of production investment,” he said.
The expert noted that Iran's economy was partly harmed by sanctions during the decade under review.
“In these years, the annual growth of the industrial sector was negative. For this reason, we must emphasize that assuming that nuclear negotiations will yield results, the statesmen should change their economic approach by not seeking to sell more oil. In fact, under the circumstances, policymakers should seek to attract more productive investment in industrial fields so that signs of prosperity can be seen in the economy,” he said.
Haqshenas believes there are still uncertainties and investment risks in Iran's economy, so we cannot expect sustainable and stable economic growth until these risks and uncertainties are eliminated.
