TEHRAN: Iran’s GDP growth stood at 6.4 percent in 2016, largely as a result of the oil sector’s bounce back, both in production and exports, following the removal of sanctions in January 2016 through the JCPOA, World Bank reported. According to the report, published on WB’s website, Iran’s GDP growth is expected to stand at 4%, 4.1% and 4.2% in 2017-2019 respectively.
“Iran is one of two countries that are expected to register a high current account surplus in 2017 and the only country with a fiscal deficit of less than 1 percent of GDP in that year”. The report says inflation appears to be stabilizing at around 10 percent after a declining trend over the past three years.” This signals that the output gap is closing. The CBI (Central Bank of Iran) has actively pursued tight controls on keeping the nominal exchange rate stable and re-sisted depreciation primarily relying on oil-based foreign exchange reserves. As a result, the real exchange rate has appreci-ated, which undermines the competitive-ness of non-oil exports. By allowing a higher number of transactions to take place at the market rate, the government managed to reduce the gap between the official and market exchange rates from 112 percent in 2012 to 14 percent in Sep-tember 2016 – which more recently in-creased to 20 percent in December. Yet, the planned unification of the two rates is delayed to next fiscal year”.
According to WB, the unemployment rate increased signifi-cantly to 12.7 percent in the second quar-ter of 2016 and remains particularly high among women and youth. “The current account surplus improved in 2016 to around 6.5 percent of GDP due to significantly higher exports to Iran’s main trading partners such as the EU as a result of the removal of economic sanctions and a pick-up in oil shipments to Europe”. According to the report, the fiscal deficit improved slightly to 1.5 percent of GDP in 2016, from 1.9 percent in 2015, even as oil revenues remained suppressed during the early part of the year. “Government debt increased to 2 percent of GDP in 2016”.