Iran Economy Grew 8.3%

Iran’s economy grew 8.3% in the last fiscal year (March 2016-17) compared to the year before, the Statistical Center of Iran's latest report shows.

The strong growth is associated for the most part with ramped up production and export of oil and related products after international sanctions imposed against Iran over its nuclear program were lifted in January 2016 as part of the landmark nuclear deal the government of President Hassan Rouhani signed with world powers in the preceding year. In exchange for the sanctions removal, Iran agreed to limit the scope of its nuclear works.

Without taking the oil sector growth into consideration, the economy expanded by 6.3%, SCI said.

Government data show Iran's crude oil production reached 3.8 million barrels per day by the end of last fiscal year from around 3 million bpd in the previous year. Under sanctions, crude output fell to 2.5 million barrels daily and exports were limited to just above 1 million bpd to a few customers in Asia.

However, Iran is allowed to pump an average of 3.8 million bpd by March 2018 under an OPEC deal aimed at eroding global inventories and lifting crude prices.

Iran on average exported 400,000 barrels daily, or 64 million liters per day, of oil byproducts to buyers in the Middle and the Far East in the fiscal 2016-17, up from around 220,000 bpd in the previous fiscal. Outbound shipments of oil byproducts are expected to rise by 200,000 barrels a day to 600,000 barrels daily in the current fiscal year, according to a report by the National Iranian Oil Products Distribution Company.

The SCI added that the agriculture sector grew by 5%, the "industry group", including mines, manufacturing, energy and construction, expanded by 11.3% and the services sector increased by 7.1% during the same period.

The report comes as the Central Bank of Iran, another body in charge of releasing periodic macroeconomic data in Iran, has yet to publish its own report on the last fiscal year.

The two bodies' data often differ from one another, as they use different base years to calculate and prepare the reports.

CBI's latest data pertain to the nine months to December 20, 2016 (Q1-3), indicating that the economy grew 11.9% during the period including oil sector growth and 1.9% excluding it.

SCI had put the nine-month growth at 7.2% including oil and 5% excluding it.

The World Bank's Economic Monitor report for the Middle East and North Africa region published last month showed Iran's growth in 2016 is estimated to have reached 6.4%, following a 1.8% contraction in the previous year, resulting from higher growth in the mining, manufacturing, services and agriculture sectors.

It added, however, that growth prospects in the medium term are expected to be modest due to near capacity oil production and weak non-oil sector activity.

"The latter will not pick up unless FDI recovers, the economy reconnects with the international banking system and more progress is made in implementing domestic reforms," the report said.

The International Monetary Fund in its latest World Economic Outlook said Iran growth is projected at 3.3% for 2017, which will rise to 4.3% in 2018. The fund put the country's growth for 2016 at 6.5%.