The government has unveiled the Seventh Five-Year Development Plan, a roadmap enumerating economic goals and targets for the next five years (March 2023-28).
Among the main targets set in the new FYDP are 8% GDP growth by the end of the plan, 3.9% rise in annual employment (creating 1 million jobs per year), an average annual inflation rate of 19.7% during the five years (9.5% by the end of the plan period), a 12.4% rise in oil exports and a 22.6% jump in non-oil exports.
The Seventh Plan was long overdue, as it is usually released before the start of the five-year plan.
“Food security is a centerpiece of the 7th FYDP, throughout which self-sufficiency in [production of] part of demand for essential goods will be materialized,” Davoud Manzour, the new head of Plan and Budget Organization, was quoted as saying by Mehr News Agency.
The plan’s draft will be submitted to the parliament as a bill for review and possible amendments before it is passed into law.
As Fars News Agency reported, the 7th FYDP is also targeting a rise of 6-12% in the share of tax and customs revenues from GDP.
All tax exemptions and discounts are also expected to be abolished by the end of the plan period.
Experts and analysts are casting serous doubts on the effectiveness of the targeting in the new FYDP, citing the failure of previous such documents to meet the set goals.
Mohammad Qasemi, the head of Iran Chamber of Commerce Research Center, says the targets in FYDP need to be moderated by experts before submission to parliament.
Describing fiscal budgets in Iran as a document that “buries realities” in the country, the official said for years, budget figures and statistics attempt to hide the economic realities on the ground.
The latest statistics and economic indicators targeted in the new FYDP are reviewed as follows:
GDP Growth
The World Bank expects Iran’s economic growth to decelerate, amid intensifying sanctions and declining oil revenues.
“Because of intensifying economic sanctions, Iran’s growth will likely remain low. As oil prices decline, Iran’s GDP is forecast to grow 2% in 2023. This represents a deceleration from 2.7%growth in 2022 which was constrained by water and electricity shortages as well as political instability,” reads the new MENA Economic Update for April.
The report forecasts Iran’s GDP to decline further to 1.8% in 2024.
As for real GDP per capita, World Bank also expects the growth to decline from 3.9% in 2021 to estimated 2% in 2022. It is forecast to drop to 1.3% in 2023 and further to 1% in 2024.
Latest data released by the Central Bank of Iran show oil registered the highest growth among economic sectors during the first three quarters of last fiscal year (March 21-Dec. 21, 2022).
According to CBI, Iran’s gross domestic product grew by 3.7% during the period compared with the preceding year’s corresponding period.
Excluding oil production, the growth rate stood at 3.2%.
The economic sectors of “agriculture”, “oil”, “industries and mines”, and “services” registered a growth of 1.1%, 9.3%, 5.6% and 2.8% during the period respectively.
According to CBI, Q1, Q2 and Q3 rates stood at 2.2%, 3.6% and 5.3% respectively.
The central bank report came a few days after the Statistical Center of Iran put the Q1-3 economic growth at 3.3%, saying without oil it stood at 2.9%.
According to SCI, the “industries and mines”, and “services” groups registered 5.3% and 2.6% growth respectively as “agriculture” contracted by 4.3%.
The broad “industries and mines” group has five sub-categories of “crude oil extraction”, “other mines”, “industry”, “energy” and “construction”, which registered a 5.6%, 0.9%, 5.1%, 9.5% and -2.2% in growth rates, the center added.
According to SCI, Q1 and H1 growth were at 5.3% and 3.6% respectively.
SCI earlier put last Iranian year’s (March 2021-22) growth at 4.3%, saying the GDP saw a 3.5% rise without taking crude oil production into account and that the sectors of agriculture, industries and services experienced a -3.7%, 6% and 4.5% growth respectively.
According to the Central Bank of Iran, the economy grew by 4.4% in the fiscal 2021-22. It said the GDP growth stood at 3.9% without taking crude oil production into account. And that the “services”, “oil and gas”, “industries and mines” and “agriculture” groups saw a respective growth rate of 6.5%, 10.1%, 1.1% and -2.6%.
According to CBI, Iran’s gross domestic product in the fiscal 2020-21 saw 3.6% growth. Economic growth, excluding oil, expanded by 2.5%.
According to SCI, the year’s GDP expanded by 0.7% compared with the year before.
Economic growth, excluding oil, saw an economic growth of near zero, SCI reported.
Inflation
The Statistical Center of Iran has put last fiscal year’s (March 2022-23) inflation at 45.8%. It also noted that the rate stood at 50.6 for rural areas and 45% in urban areas.
The SCI report came after the Central Bank of Iran said the country experienced an average annual inflation rate of 46.5% in the last fiscal year that ended on March 20.
“Transportation”, “health and medical care”, “clothing and shoes”, “home appliances and services”, “communications”, “entertainment and cultural affairs”, “education”, “restaurant and hotel”, “tobacco”, “housing and utilities (water, electricity, gas and other fuel)”, and “miscellaneous goods and services” registered 32.3%, 41.9%, 45.9%, 33.3%, 19.3%, 37.8%, 35.1%, 80%, 28.8%, 48.3% and 38.3% respectively.
“Housing and utilities” with 37.05%, “food and beverages” with 25.51% and “transportation” with 8.9% have the highest coefficient among the groups surveyed.
Labor Market
Latest data released by SCI on Iran’s labor market show unemployment rate, the proportion of the jobless population of ages 15 and above, stood at 9.7% in the fourth quarter of the previous Iranian year (Dec. 22, 2022-March 20), indicating a 0.3% year-on-year increase.
A total of 2.52 million Iranians were unemployed in Q4.
Men’s unemployment stood at 8.5% while the rate for women hovered around 15.7%.
Over 1.85 million men and 670,349 women of ages 15 and above were jobless in Q4.
The unemployment rate was 10.3% for urban areas (2.05 million people) and 7.9% for rural areas (473,818 people).
SCI put the Q4 labor force participation rate — the proportion of the population of ages 15 and above that is economically active either employed or looking for a job — at 40.5% or 25.96 million people, registering a 0.1% increase year-on-year.
Men’s and women’s economic participation rates were 67.8% and 13.3% respectively in the same period.
A total of 21.7 million men and 4.25 million women of ages 15 and above were economically active in Q4, i.e., they were either employed or looking for a job.
The center provides two figures for the youth unemployment rate: the proportion of the population between 15 and 24 years and those between 18 and 35 years.
The youth unemployment rate of those between 15 and 24 years stood at 23.1% in Q4, posting a 1.1% increase while the unemployment rate of those between 18 and 35 years stood at 17.4%, posting an increase of 0.8% YOY.
The total Q4 employment rate was 36.6% (23.43 million), unchanged compared with the same quarter of the last Iranian year. Employment rates for men and women were 62% and 11.2%, respectively, which constituted 19.84 million men and 3.45 million women in Q4.
Employment rate was 36.1% (17.91 million people) in urban areas and 38.2% (5.52 million) in rural areas.
The share of employment of university graduates stood at 27.4% of the total employed population, wherein male and female graduate employment rates were 22.9% and 49.7%, respectively. In urban and rural areas, graduate employment rates stood at 33.2% and 8.9% of the total number of job-holders, respectively.
Employment is defined as persons of working age engaged in any activity to produce goods or provide services for pay or profit, whether at work during the reference period or not at work due to a temporary absence from a job, or to working-time arrangement.
Foreign Trade
According to the Islamic Republic of Iran Customs Administration, Iran traded 159.23 million tons of goods worth $112.82 billion (excluding crude oil exports) in the fiscal 2022-23 (ended March 20).
Rouhollah Latifi, the spokesman of the Iranian House of Industry, Mine and Trade’s Trade Development Commission and former spokesman of the Islamic Republic of Iran Customs Administration, says trade value has increased by $11.38 billion compared with that of the previous year.
Iran’s exports, excluding crude oil, reached 122.56 million tons worth $53.16 billion during the period, registering a 10% rise in terms of value.
“This is a new record as the highest export value was previously registered in the fiscal 2014-15 with $50.56 billion,” he was quoted as saying by IRNA.
China with $14.58 billion was Iran’s main export destination during the period (unchanged), followed by Iraq with $10.23 billion (up 15%), Turkey with $7.45 billion (up 23%), the UAE with $5.76 billion (up 28%) and India with $2.14 billion (up 18%).
Imports stood at 37.18 million worth $59.65 billion, registering a 10% fall in terms of weight, but a 13% rise in value.
The UAE with $18.39 billion (up 11%) was the main exporter to Iran during the period. China with $15.74 billion (up 24%), Turkey with $6.09 billion (up 15%), India with $2.01 billion (up 80%) and Germany with $2.01 billion (up 5%) came next.
According to Majid Reza Hariri, chairman of Iran-China Chamber of Commerce, the lion’s share of Iran’s foreign trade is with five countries, namely China, the UAE, Iraq, Turkey and Afghanistan.
“A limited number of trading partners is not a good idea for a country whose export destinations are limited. Each of these countries could become a risk if and when they get a bigger share of Iran’s trade,” he told the Persian daily Ta’adol.
“We are likely to get into trouble for whatever reason, including political issues, with these countries, each which account for more than 15% of our trade. All said, market diversity is a must for import and export. Now that Iran is under sanctions and cannot forge ties with Europe and the US, we need to concentrate on other markets, namely Southeast Asia, South Asia, Central Asia, Africa and Latin America.”
