Economy Ministry: 6.2% Growth, 9.8% Inflation Next Year

Iran’s GDP is projected to grow by 6.2%, as inflation is expected to average 9.8% in the next Iranian year (March 2017-18), according to the Ministry of Economic Affairs and Finance's estimates.

Speaking to reporters on Tuesday, Deputy Economy Minister Saeed Mirshojaeian said next year’s growth rate will be heavily dependent on oil price, which makes it difficult to make any predictions, adding that growth will be “sustainable” and diminish income inequality in the long run.

The economy recorded a whopping 7.4% growth over the six months to September 20, due mostly to ramped-up oil exports as a result of the lifting of sanctions imposed over Iran’s nuclear program.

The GDP growth, excluding oil sector, amounted to 0.9%. The figure for Q1 stood at -0.9%, while Q2 growth without oil amounted to 2.6%. 

The oil sector registered the highest increase in GDP in the period with a growth of 61.3%. A 55.4% and 67.2% growth in the oil sector was reached in the first and second quarters respectively. 

As the figures indicate, much of the growth was driven by the possibility of Iran increasing its oil exports following the removal of sanctions last year as part of the historic deal with world powers a year earlier to scale back the scope of Iran’s nuclear energy program.

Iran is currently producing 3.9 million barrels per day of crude oil. 

According to Oil Minister Bijan Namdar Zanganeh, the country is closing in on its target of restoring output to the level of 4 million bpd it produced before the 2012 imposition of international nuclear sanctions, which specifically targeted Iranian petroleum and financial sectors.

The Islamic Republic exceeded its OPEC production ceiling of just under 3.8 million bpd following the group's decision in November to cut output by about 1.2 million bpd.

“Next year is decisive as it is the first year of the implementation of the sixth five-year development plan,” Mirshojaeian was quoted as saying by Mehr News Agency.

The sixth plan, which stipulates 8% annual GDP growth, was initially supposed to start from March 2016, but it was postponed for a year. Its draft is currently being discussed in the parliament, pending the Guardians Council's approval.

“The 8% growth requires a 15.4% rise in investment,” the deputy minister said. “The inflation rate has reached the single-digit territory, sending a positive signal to the economy and the world,” the deputy minister said.

Iran's inflation rate went below 10% for the rolling year ending June 20. This was the first time the country was experiencing single-digit inflation in about a quarter century.

The latest report released by the Central Bank of Iran shows the average goods and services Consumer Price Index for urban areas in the 12 months ending January 19, which marks the end of the Iranian month of Dey, reached 8.6%, remaining unchanged for the third month in a row.

Mirshojaeian predicted that the inflation rate will begin to experience a slight increase. 

“The inflation rate is expected to rise to up to 9% by the end of the [current Iranian] year (March 20, 2017),” he said.