57750
The government of President Hassan Rouhani set an agenda for the removal of financial and economic sanctions after it took office  and achieved the desired result after lengthy negotiations.
The government of President Hassan Rouhani set an agenda for the removal of financial and economic sanctions after it took office  and achieved the desired result after lengthy negotiations.

Economic Indices Indicate Positive Developments

Gross domestic product in the first half of 1395 (March 20-September 20, 2016) grew by 7.4%

Economic Indices Indicate Positive Developments

After years of negotiations on Iran’s nuclear program and the unraveling of financial and economic sanctions, the full implementation of the Joint Comprehensive Plan of Action between Iran and six world powers began on January 16, 2016.
Given the positive expectations about JCPOA, political, security and economic outcomes are of great importance one year after the sanctions removal.
Had the sanctions remained in place, the country was bound to face even more economic woes, a recent report by the Central Bank of Iran declared.
 

> Foreign Exchange Rates  

Fluctuations in foreign exchange rates have reduced significantly since the start of the 11th government of President Hassan Rouhani, thanks to the prospects of reaching the nuclear agreement and improvement of commercial and financial ties with the world as well as the removal of restrictions on oil sales.
Rial’s exchange rate against the dollar grew by 3%, 5.2% and 4.5% year-on-year in 1393 (March 2014-15), 1394 (March 2015-16) and the eight months of the current Iranian year (started March 20, 2016), respectively.
Also, the gap between currency exchange rates in the domestic market has also reduced significantly [Iran has a multiple exchange rate regime]. The prospects of a nuclear agreement and the consequent implementation of the deal as well as CBI’s currency rate policies had a significant role in controlling the market.
The relative stability of the foreign currency market from March 2013 to November 2016 shows Iran’s economy is basically healthy. Exchange rates’ fluctuations seen last December were mostly caused by “the expectation factor” and are predicted to go away.

> Foreign Trade

Thanks to the implementation of JCPOA and Iran's moves to normalize economic ties with the world, the country's total exports saw a 22.6% rise in weight and around 9.1% growth in value in the nine months of the current Iranian year (March 20-December 20, 2016) compared with the similar period of last year.
According to the Islamic Republic of Iran Customs Administration, non-oil exports (not including petrochemicals, gas condensates and natural gas) during the nine months to December 20 saw an increase of 4.8% year-on-year.
Imports to Iran had a 4.4% growth in the same period. In total, Iran's foreign trade stood at $63.1 billion, indicating a 6.7% rise (around $3.9 billion) compared with last year’s corresponding nine-month period.
Out of Iran's top 15 trade partners, imports from Asian countries, including China, the UAE, South Korea, Turkey, India and Singapore, experienced declines, whereas imports from European countries, including Germany, Russia, Italy, France, the Netherlands and the UK, increased during the nine months. This indicates the return of European countries to the club of Iran’s trading partners.

> Employment

According to the Statistical Center of Iran, the number of employed in different economic sectors registered a year-on-year increase of 1.8% in the fourth quarter of 1394 (December 22, 2015-March 19, 2016), 3.4% in the first quarter of the current Iranian year (March 20-June 20, 2016) and 2.8% in the second quarter (June 21-September 21, 2016).
The report shows 738,000 and 625,000 jobs were created in Q1 and Q2 of this year, respectively. The rise in the number of jobs has been accompanied by an increase in labor market demand and economic participation rate.
In other words, more people are looking for work, as positive expectations have emerged about Iran's economy. For example, the economic participation rate stood at 37.7% in Q4 of 1394, 39.5% in Q1 of 1395 and 40.4% in Q2 of 1395, indicating a 0.4%, 1.5% and 1.5% year-on-year growth respectively.

> Economic Growth

According to preliminary calculations of Iranian statistical bodies, gross domestic product in the first half of 1395 (March 20-September 21, 2016) grew by 7.4%.
Undoubtedly, the surge in crude oil and gas condensates production and exports resulting from the removal of sanctions had a significant part in bringing about this growth.
Following the implementation of JCPOA, crude oil production saw a 12.1% rise while exports had a 24.2% increase in Q4 of 1394 compared to the prior year's corresponding period. This positive trend continued well into the current year, as a 14.9% growth was registered in production and a near 46.5% jump in crude oil exports was recorded in H1 over last year's similar period.
The rise in oil exports not only affects the GDP directly, but it also leaves its mark on government budget by stimulating growth in other sectors. Statistics on the components of GDP show other economic sectors have also registered value added in H1.
Industries’ value added has grown by 2.1%, indicating a positive change in this sector. Industries and mining sector is expected to register a growth in the second half of the current year in light of the rise in oil prices that started in Q4 of 1394.
 
> Inflation Rate

The inflation rate (the 12-month changes in goods and services Consumer Price Index) has declined steadily and significantly from 40.4% in the Iranian month ending October 22, 2013, to 8.6% in the month ending December 20, 2016.
The year-on-year inflation rate reached 9.2% in Azar (the Iranian month ending December 20, 2016) from 45.1% in the month ending June 20, 2013.  The government’s effective measures and policies and the considerable improvement of inflation expectations, thanks to the stability of foreign currency market, have played a crucial role in bringing down the inflation rate.
It is necessary to reiterate the fact that as the JCPOA came into effect and Iran's foreign trade improved, the instability risk of currency market decreased considerably.
Predictions are that the inflation rate will remain in the single-digit territory by the end of the current Iranian year (March 20, 2017).

> Conclusion

Economic developments of countries are not detached from international developments. The more their economies engage with the outside world, the more they will benefit or be hurt by positive or negative changes in the international arena.
Given its reliance on oil revenues, Iran’s economy will be affected by international relations and the oil market shocks. One such shocks was the embargo on Iran’s crude oil during the past years, which put a strain on oil sales and payment procedures to transfer revenues and robbed the country of ample opportunities in production and investment in the energy sector.
The Rouhani government set an agenda for the removal of financial and economic sanctions after it took office [in 2013] and achieved the desired result after lengthy negotiations.
The practical advantages of JCPOA in various economic areas were substantial during the past year and are expected to see even more positive changes in the future, thanks to the gradual return of the economy to the path of advancement and growth.

Short URL : https://goo.gl/EQyDBd
  1. https://goo.gl/V1yKvj
  • https://goo.gl/kr2nBs
  • https://goo.gl/vxTRXO
  • https://goo.gl/VrWvaH
  • https://goo.gl/XClhMB

You can also read ...

Iranian Exports to Nigeria Up 69%
Iran exported close to $3 million worth of goods to Nigeria...
Rice Imports at 760,000 Tons Last Year
Around 760,000 tons of rice were imported into Iran during the...
About 3.36 million Iranians were unemployed this spring, including 10.6% of men (2.24 million) and 20.8% of women (1.11 million) of ages 10 and above.
As 16 of the ministerial nominees proposed by President Hassan...
Lacking  Substance
A company is in distress, its stocks are tanking, and red ink...
Economy Minister Appoints IRICA Caretaker
New Minister of Economic Affairs and Finance Masoud Karbasian...
Nobakht Reappointed Head of Planning, Budget Entity
President Hassan Rouhani reappointed Mohammad Baqer Nobakht as...

Add new comment

Read our comment policy before posting your viewpoints

Image CAPTCHA
Enter the characters shown in the image.

Trending

Googleplus