Economy, Domestic Economy

Higher Growth Rates Subject to FDI

Higher Growth Rates Subject to FDIHigher Growth Rates Subject to FDI

The director of Iran’s National Tax Administration says $80 billion in foreign investment will be needed to achieve the 8% annual economic growth enshrined in the next five-year economic development plan (2016-21).

“Attracting foreign investment is subject to peace and stability. The Rouhani government has managed to create both in the country,” IRNA quoted Kamel Taqavinejad as saying.

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.

The economy emerged from recession two years ago with a 3% growth. The rebound in economic output followed two years of recession when the economy contracted 5.8% and 1.9% back to back. Last year’s growth was officially put at 0.9% by the SCI.

Government officials predict a 5% GDP growth this year, which is slightly above World Bank’s 4.2 % and 4.6 % estimates for 2016 and 2017 respectively.

The International Monetary Fund sees a 4-4.5% GDP growth over the medium term.

According to government spokesman Mohammad Baqer Nobakht, a total of $5.16 billion was invested in Iran by foreign companies after the nuclear agreement came into effect in January. Nobakht says in the last fiscal year FDI was $6.71 billion and the year before $920 million.

The nuclear deal signed between Iran and the six world powers (the five permanent members of the UN Security Council plus Germany) in July 2015 saw the easing of sanctions on Tehran in exchange for limits on the scope of its nuclear program.

The president and his man have often said that decent growth rates would not be possible without substantial foreign investment in key sectors, namely, oil, gas, transportation, heavy industries, energy, infrastructure and health. Their reasoning is based largely on the steep decline in the international price of crude that has taken a beating over the past two years, falling to $40 a barrel from $110 in 2014.