Economy, Domestic Economy

Oil Sector Driving GDP Growth

Oil Sector Driving GDP GrowthOil Sector Driving GDP Growth

The Statistical Center of Iran recently reported that Iran’s gross domestic product expanded by 4.4% during the first quarter of the current Iranian fiscal year that started in March, compared to the same period in 2015.

However, the positive outcome of this considerable growth has yet to manifest itself in the country’s business environment, says Pedram Soltani, deputy head of Iran Chamber of Commerce, Industries, Mines and Agriculture in an opinion piece published in the news portal of Tehran Chamber of Commerce, Industries, Mines and Agriculture.  

The remarkable growth rate of 57% in the oil sector compared to 8.4% in agriculture sector, 8.8% in industrial and 2.9% in the services sectors shows that Iran’s economy still remains reliant on the oil sector. Other sectors are gripped by recession and the boost in oil export cannot even be felt by the downstream petroleum industry, let alone the other struggling spheres, he said.

“International sanctions imposed against Iran over its nuclear program were one main impediment in the way of businesses. Yet they are to blame for 40% of our woes. The rest of our problems come from within our own business environment, which is in dire need of structural reforms.”

Economic experts have predicted up to 5% economic growth for this year (the current fiscal year ends in Match 2017), due largely to the double-digit increase in the output in the oil and gas industries. But the question is how long can the economy depend on oil export revenue?

With less than one year before the end of President Hassan Rouhani’s first term   and the unraveling of the sanctions, “we can remain hopeful that the share of the non-oil sector in GDP would improve by facilitating business and rolling back the restrictions” on the economy and the banking sector.