Domestic Economy

Decent Growth Amid Nuclear Talks

Decent Growth Amid Nuclear Talks
Decent Growth Amid Nuclear Talks

Economic growth as reported by the Central Bank of Iran is in part the outcome of eased sanctions following negotiations between Iran and the six world powers President Hassan Rouhani’s Chief of Staff Mohammad Nahavandian said on Thursday.

The CBI reported earlier this week that the economy grew 4% in the first half of the fiscal year that began on March 21, 2014.

“The CBI’s report on economic growth should politically benefit Iran as it can help strengthen the country’s position in nuclear talks with the P5+1,” Nahavandian said, referring to the ongoing negotiations between Iran and the five permanent members of the UN Security Council (the US, France, the UK, China and Russia) plus Germany in a bid to end a dispute over Tehran’s nuclear energy program.

The two sides have already reached an interim deal under which Iran has agreed to limit parts of its nuclear activities in exchange for the West easing economic sanctions against the country and releasing part of Iran’s frozen assets overseas.

The Iranian economy grew by 4.6% in spring, ending two consecutive years of negative growth. Economic growth in 2012-13 was -5.8 percent excluding the oil sector and -6.8 percent including the sector. For 2013-14, the figure was -1.9 percent, including the oil sector, according to the CBI.

“The CBI gathers the data from various economic sources, and the impact of the easing sanctions will be felt more in the manufacturing sector,” Nahavandian said, reiterating that the Rouhani administration has managed to get the country out of recession in less than a year.

“After two consecutive seasons of positive growth, it can be safely said that the economy is now out of recession,” Nahavandian asserted.

An Iranian economist from Brandeis University in Massachusetts says the interim accord reached between Iran and the P5+1 in November 2013 paved the way for growth, since it increased the volume of imports and alleviated inflationary pressures.

In interview with BBC radio this week, Nader Habibi said that the Rouhani administration has been successful in curbing inflation by efficiently managing the money supply within the past 16 months, which played a key role in achieving the announced growth.

“However, the number of created jobs has not yet increased as expected, and the growth owes to industries and export of oil and petrochemical products,” Habibi said.

According to the CBI’s Tuesday report, the agriculture, oil, mining and industry sectors posted positive growth rates of up to 8.1 percent in total in the first half of the current year.

Since President Hassan Ruohani took office, the forex market has been more stable, compared to previous years. Ease of imports and controlled foreign exchange rate contributed to the government’s success in reducing inflation from 40 percent to the current 17 percent.