Economic outlook Iran: Growth despite continuing sanctions
After a two-year severe recession caused mainly by the reactivation and further tightening of US sanctions, Iran's economy has expanded again in 2020/2021 (Iranian year 1399; 21 March to 20 March) despite the corona epidemic. A further acceleration in growth is assumed for 2021/2022. The current year 2022/2023 could also close with a decent plus.
The International Monetary Fund (IMF) and the World Bank have made upward revisions in the Iran forecasts presented in April 2022. This is mainly due to developments on the oil markets, which should enable Iran - despite sanctions - to further increase oil exports and, due to prices, also considerably higher oil revenues.
For 2021/2022, the IMF estimates a real GDP growth of 4.0 per cent (forecast in October 2021: 2.5 per cent), which will still be 3.0 per cent (2.0 per cent) in 2022/2023. The World Bank forecasts 4.1 percent for 2021/2022 (October 2021: 3.1 percent) and 3.7 percent for 2022/2023 (2.4 percent).
Consumption: Private households are buying more again
High inflation has caused purchasing power to shrink sharply over the past four years. Despite the loss of purchasing power, official statistics have reported a rebound in private consumption since the beginning of 2021. According to the central bank's calculations, in 2020/2021 the decline in private consumption has slowed to -0.5 per cent (2019/2020: -4.5 per cent). For the first nine months of 2021/2022, an increase of 3.4 per cent is shown. Forecasts assume that there will be a further increase in consumption in the current year.
Foreign trade: strong expansion of imports and exports
After three years of significant declines, Iran's foreign trade is now showing strong growth again. According to Iranian customs data, imports increased by 36 per cent to US$53 billion (CIF) in 2021/2022. The United Arab Emirates (UAE) achieved a 31 per cent supply share, mainly re-exports via Dubai. China came in at 24 per cent, Turkey at 10 per cent and Germany at 4 per cent. Russia moved up to 5th place with 3 per cent.
Non-oil exports increased by 40 per cent to US$48.6 billion in 2021/2022. The main buyer was China with a share of 29 per cent. It was followed by Iraq (18 per cent), Turkey (13 per cent), UAE (10 per cent) and Afghanistan (4 per cent).
No official data is yet available on the value of oil exports for 2021/2022. However, a significant increase can be expected. Nevertheless, oil exports remain at a low level due to US sanctions. According to the Central Bank, oil and gas exports fell from US$63 billion to US$21 billion between 2017/2018 and 2020/2021.
Source: GTAI Germany Trade & Invest, 13 May 2022
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Market update: Facts about Iran at a glance
Iran is the Middle East‘s leading industrial nation
- An energy superpower with the world’s largest natural gas supply and the fourth-largest proven oil reserves
- With 86 million inhabitants the second most populous nation in the Middle East and the 17th most populous in the world
- Leading industries in the Middle East in car-manufacture and transportation, construction materials, home appliances, food and agricultural goods, armaments, pharmaceuticals, information technology, power and petrochemicals
- A regional power with major influence in the region
- A top five producer in the world of apricots, cherries, sour cherries, cucumbers and gherkins, dates, eggplants, figs, pistachios, quinces, saffron, walnuts, and watermelons
- Geostrategic importance because of its central location in Eurasia and Western Asia, and its proximity to the Strait of Hormuz; a major regional and middle power, exerting considerable influence in international energy security and the world economy
- Host to Asia‘s 4th-largest number of UNESCO World Heritage Sites and home to one of the world‘s oldest civilisations
- A multicultural nation comprising numerous ethnic and linguistic groups
- Dynamic institutions encouraging the establishment of companies thanks to favorable fiscal policy and major economic reforms