Domestic Economy

Agriculture Sector Main Driver of Growth

Agriculture Sector  Main Driver of Growth
Agriculture Sector  Main Driver of Growth

The Statistical Center of Iran announced that the economy grew 0.7% during the nine months of the current Iranian year (March 21-December 21, 2015).

Agriculture was the only growing sector (3.2%), whereas industrial and services sectors posted a negative growth of 1.2% and 0.3% respectively.

Despite the impact of economic sanctions, the agriculture sector has been the main driver of growth for the Iranian economy in recent years. Agriculture Minister Mahmoud Hojjati said domestic agricultural production has increased from 97 million tons in the Iranian year ending March 2014 to 112 million tons in the year ending March 19, 2016, indicating a 15.4% rise, IRNA reported.

“We were successful particularly in the production of wheat and sugar. In the year ending March 2014, the government purchased 4.8 million tons of domestically produced wheat, whereas the figure for the current Iranian year is over 8 million tons, indicating a 67% increase. About 1.5 million tons of sugar have been produced this, 400,000 tons more than the 2014 figure.

Watershed management plans were carried out on over 2.4 million hectares of land and some 270,000 hectares of farmland were modernized using the latest watering systems over the past three years. Furthermore water and soil preservation, natural resources maintenance, and fortification of vegetation grew by 60%, Hojjati added.

The SCI report added that GDP growth stood at 0.5% in the first quarter (March 21-June 21), 0.9% in the second quarter (June 22-September 22) and 0.5% in the third quarter (September 23-December 21).

 Future Targets, Projections

Iran is eying an 8% annual growth as part of its sixth five-year development plan (2016-21), following the removal of western sanctions on its economy.

The sanctions were lifted mid-January after the UN nuclear agency confirmed that Tehran had been abiding by its promise to restrict the scope of its nuclear energy program as part of a landmark deal it struck with P5+1 group of countries–the US, the UK, France, China and Russia, plus Germany.

“Serious reforms in the national economy and foreign investments” are required to achieve the ambitious growth, according to government spokesman and head of Management and Planning Organization, Mohammad Baqer Nobakht.

“Iran needs foreign investments worth $30 billion to $50 billion for achieving its 8% annual growth target,” Iranian President Hassan Rouhani has been quoted as saying.

Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei outlined the general policies of the sixth plan in a letter to President Hassan Rouhani on June 30.

“Considering that the country has experienced negative economic growth in two consecutive years until a year ago and registered 3% economic growth last fiscal year (March 2014-15), achieving the targeted economic growth requires various mechanisms to procure the required financial resources,” Nobakht said.

“Under the current economic conditions, achieving 8% economic growth is not possible during the first year of the sixth plan.”

The International Monetary Fund predicts that higher oil production, lower costs of trade and financial transactions and access to foreign assets are expected to lift real GDP to 4–5.5% in 2016, IMF Article IV Consultation announced in its 2015 concluding report.