The MENA economic update 2022 report’s forecast is 1.3 percentage points higher than that in the previous report published by the World Bank in January
The World Bank has once again revised up its forecast about Iran’s economic growth in 2022.
In a new report titled “Reality Check: Forecasting Growth in the Middle East and North Africa in Times of Uncertainty”, the bank expects the economy to grow by 3.7% this year.
The Middle East and North Africa (MENA) economic update 2022 report’s forecast is 1.3 percentage points higher than that in the previous report published by the World Bank in January.
The January report expected Iran’s economy to grow 2.4% in 2022, 0.2% more than the bank’s June 2021 projection.
“Growth in the Islamic Republic of Iran in 2022 has been revised marginally higher with tapering Covid-19 mobility restrictions benefiting the services sector and a gradual recovery in the oil sector,” read the previous report.
“In the Islamic Republic of Iran, the pandemic’s impact on the services sector was limited and oil production and industrial activity rebounded, minimizing the slowdown in economic growth.”
According to the new report, Iran’s GDP is estimated to have expanded by 3.4% in 2021.
The Global Economic Prospects report published in January had estimated the economy to have expanded 3.1% in 2021, 1% more than previously estimated.
The new report’s forecast for 2023 is at 2.7% compared to 2.2% in the January report, which was 0.1% less than what had been previously expected.
The World Bank’s forecasts about Iran’s real GDP per capita growth are at 2.5% and 1.5% in 2022 and 2023 respectively. Its 2021 estimate was 2.8%.
“Uncertainty is again clouding the prospects for the global economy. The unexpected war in Europe presents significant challenges to the world economy and to the Middle East and North Africa [MENA] region in particular. This shock has rippled across global commodity and capital markets during a time when uncertainty was already obscuring the economic prospects of the region. Chief among the sources of uncertainty that predate the war in Ukraine was the scientific uncertainty about the evolutionary path of the virus that causes Covid-19. The global scientific community is being tested by the prospects of future outbreaks and the severity of a disease that seems likely to mutate further,” reads the opening of the new World Bank report.
“Like the rest of the world, the MENA region faces considerable uncertainty that stems not only from possible future Covid-19 variants, inflation and the recent conflict in Ukraine, but also from a tightening of global monetary policy. The World Bank forecasts that economic growth in the region will be 5.2% in 2022, although that could end up being optimistic, as has been the pattern over the past decade. In the current context, rising oil prices are likely to contribute to uneven outcomes, improving prospects for oil exporters while lowering expected growth rates for oil importers. Inflationary pressures from supply-chain disruptions present additional downside risks.”
IMF Forecast
The International Monetary Fund’s World Economic Outlook report titled “Recovery During a Pandemic” has forecast Iran’s GDP growth to decline slightly to 2% in 2022.
“The global recovery continues but the momentum has weakened, hobbled by the pandemic. Fueled by the highly transmissible Delta variant, the recorded global Covid-19 death toll has risen close to 5 million and health risks abound, holding back a full return to normalcy. Pandemic outbreaks in critical links of global supply chains have resulted in longer-than-expected supply disruptions, further feeding inflation in many countries. Overall, risks to economic prospects have increased and policy trade-offs have become more complex,” reads the opening of the report.
“Compared to our July forecast, the global growth projection for 2021 has been revised down marginally to 5.9% and is unchanged for 2022 at 4.9%. This modest headline revision, however, masks large downgrades for some countries. The outlook for the low-income developing country group has darkened considerably due to worsening pandemic dynamics. The downgrade also reflects more difficult near-term prospects for the advanced economy group, in part due to supply disruptions. Partially offsetting these changes, projections for some commodity exporters have been upgraded on the back of rising commodity prices.”
The report noted that pandemic-related disruptions to contact-intensive sectors have caused the labor market recovery to significantly lag the output recovery in most countries.
“The dangerous divergence in economic prospects across countries remains a major concern. Aggregate output for the advanced economy group is expected to regain its pre-pandemic trend path in 2022 and exceed it by 0.9% in 2024. By contrast, aggregate output for the emerging market and developing economy group [excluding China] is expected to remain 5.5% below the pre-pandemic forecast in 2024, resulting in a larger setback to improvements in their living standards,” it said.
Domestic Reports
The Central Bank of Iran’s latest report on the country’s GDP says the economy grew by 4.1% in Q1-3 of last fiscal year (March 21-Dec. 21, 2021) compared to the preceding year’s corresponding period.
According to CBI, the GDP growth stood at 3.4% without taking into account crude oil production during the period under review.
Oil saw the biggest growth of 11.7% among main economic sectors surveyed by the bank.
The CBI data further show “services” expanded by 6.5%, “industries and mines” registered zero growth and “agriculture” contracted by 2.1%.
The report came shortly after the Statistical Center of Iran said the economy grew by 5.1% during the same period (Q1-3), adding that without taking into account the growth in oil sector, GDP grew by 3.8%.
According to SCI, “agriculture” contracted by 3.9%, “industries and mines” grew by 7.1%, and “services” expanded by 5.1%. The subsectors of “industries and mines”, namely “crude oil and natural gas extraction”, “other mines”, “industry”, “energy” and “construction” saw 13.4%, -2.5%, 3.4%, 5.1% and 6.3% growth.
According to CBI, Iran’s gross domestic product in the last fiscal year (March 2020-21) saw 3.6% growth. Economic growth, excluding oil, expanded by 2.5%.
According to SCI, last fiscal 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.
Discrepancies were also seen in the SCI and CBI reports on Iran’s economic growth in the fiscal 2019-20.
According to SCI, the Iranian economy experienced a -7% contraction in the fiscal 2019-20 and GDP shrank by -0.6% without taking oil production into account.
This is while CBI estimated the fiscal 2019-20 growth at -6.5% and put growth at 1.1% by excluding the oil sector.
Iran’s gross domestic product shrank by 4.9% in the fiscal 2018-19 compared to the year before, according to SCI. The center put that year’s growth, excluding oil production, at -2.4%.
The CBI did not release any report of fiscal 2018-19 economic growth rate.
Iran’s economy emerged from recession in the fiscal 2014-15 with a 3% growth after two years of recession when the economy contracted by 5.8% and 1.9% back to back, according to the Central Bank of Iran.
Growth in 2015-16 has been put at -1.6% by CBI and 0.9% by SCI.
The CBI has put 2016-17 growth at 12.5% while SCI says it was much lower and near 8.3%.
