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country’s agriculture and industry sectors, while only a third of the pandemic-period jobs losses have so far been recovered, it added.
The World Bank said it anticipated Iranian GDP growth of 3.7% in 2022, following an estimated 4.1% in 2021 and 3.4% in 2020.
“Oil revenue shortfalls led to a growing budget deficit, adding to inflationary pressures through the government’s deficit financing operations,” the World Bank also noted in a summary of the update.
The international financial institution added: “Iran’s economy is slowly emerging from a decade-long stagnation bogged by two rounds of economic sanctions, marked oil price cyclicality, and the COVID-19 pandemic. Despite adjustments that partially mitigated the impact of external shocks, the economy remains constrained by widespread inefficiencies and price distortions that have contributed to the economy’s subpar performance.
“While social protection measures partly mitigated pressures, the lack of targeting and inflation indexation reduced their impact over time. Furthermore, climate change challenges in Iran have hurt growth, especially in labor-intensive agriculture and industry sectors, following record high temperatures and low rainfalls. These factors constrain the pace of recovery and the dynamism of the economy in the outlook.”
In its outlook for Iran, the World Bank said: “Average GDP growth is projected to remain modest in the medium term as the economy remains constrained by the continued impact of the pandemic through weaker domestic and global demand, while trade, especially oil exports, remains restricted by ongoing sanctions.
“Iran’s economic outlook is subject to significant risks. On the upside, further increase in oil prices can directly boost fiscal revenues and indirectly lead to a faster growth in oil export volumes. Downside risks relate to the resurgence of new COVID-19 variants, worsening climate change impact, and heightened geopolitical tensions including the war in Ukraine’s impact on global food prices and Iran’s imports.”
4.0 Real Economy 4.1 Industrial production
Iran’s industrial output up 6% y/y in first three Persian calendar months says central bank
Iran’s industrial sector grew by 6% in the first three months of the Iranian calendar year (March 21-June 21), according to Deputy Industry Minister Mehdi Sadeqi Niaraki. Sadeqi Niaraki was reported as citing Central Bank of Iran (CBI) data by the semi-official Mehr News Agency.
The uptick coincided with a cessation of coronavirus (COVID-19) restrictions across the country, with factories returning to work. However, industrial production remained at a stubbornly low level due to the severe devaluation of the Iranian rial against hard currencies, forcing producers to bump up prices.
In the first four months of the Persian calendar year (March 21-July 22) more than 2,000 production units and over 54,000 jobs were created, the minister added. Year on year, job creation in industry was up 46%, he said.
19 IRAN Country Report June 2022 www.intellinews.com