Ambiguity Regarding Economic Growth Rate Statistics in Iran

According to the latest report from the Central Bank based on preliminary calculations by the Economic Accounts Department, and based on statistics and information received from relevant statistical authorities, the Gross Domestic Product at base prices and at constant prices (100=1383) has grown by 7.4% in the first six months of this year compared to the same period last year. Hassan Rouhani also recently referred to this statistic in a speech. However, this statistic is preliminary and pertains to the first six months of the current year, and it is natural that it may be adjusted over the course of a year, as has happened in previous years. The economic growth rate from last year and the year before was also a matter of dispute, with various governmental agencies presenting different statistics that were later adjusted. For example, the Governor of the Central Bank announced a growth rate of 5.4% for the spring of this year, while the Statistical Center reported a growth rate of 4.4%. If we consider the six-month statistic, it raises some questions and does not align with internal and external estimates. For instance, according to the Research Center of the Parliament, the economic growth rate for this year in pessimistic and optimistic scenarios is estimated to be between 4% and 6.6%, while the Minister of Economy estimated it at 5%, which is lower than the current figure of 7.4% from the Central Bank. Moreover, the process of economic growth, especially after a relatively long period of recession, is very sensitive and can be halted. Numerous political and economic shocks exist that could disrupt the process of exiting inflationary recession and lead to renewed political and economic crises. According to assessments by international risk evaluation institutions, the Iranian economy has not yet been able to reach a conventional balance with the world. Besides the issue of nuclear negotiations, interference in the affairs of other countries and conflicts among factions can halt the very sensitive and vulnerable economic growth process. Therefore, the economic growth rate can only be considered a symbol of exiting recession and achieving sustainable growth if it is sustained over several consecutive quarters. The same report from the Central Bank adds that 'the high growth of value added in the oil sector, as well as the growth of value added in other economic sectors, also shows improvement in the second quarter of this year compared to the first quarter.' This is not surprising, as the Iranian economy is both externally dependent and internally driven; in other words, the sale of crude oil in the global market is a source of financing for investment and consumption for growth in the domestic market. Therefore, it is natural that with increased exports and sales of crude oil, government revenues have increased, but this increase is limited and cannot change the economic growth rate so rapidly and intensely. Real growth occurs when the resources obtained from oil revenues are injected into the Iranian economy in the form of investment or increased government and household current expenditures. However, the ambiguity is not only in economic growth but also in other signs. The reasons for the ambiguity in the Central Bank's economic growth statistics indicate that the average economic growth in Iran over the past 30 years and last year did not exceed 3%, and Hamid Pourmohammadi, Deputy of the Management and Planning Organization of the country, announced in a meeting of the Planning Council of Chaharmahal and Bakhtiari province that the average economic growth of the country over the past 10 years was 2.4%. Therefore, Iran's economic growth capacity is limited and cannot rapidly and intensely reach 7% or higher. Achieving such growth, especially sustainable growth, requires a longer time and specific economic and political conditions. Furthermore, there are usually two categories of indicators or factors that take a positive trend during growth: input factors of the economic system, such as increased government oil revenues and public and private investment, increased imports, and output indicators such as increased employment, reduced unemployment, and improved household consumption. The statistics related to oil revenues have shown a positive trend, but there are still no signs of acceleration in public and private investment. For example, there are still no signs of high growth or stability in the housing market, nor has there been a significant change in the monetary sector regarding bounced checks or unregistered overdue debts. Additionally, the expansion of unemployment, low activity levels of production units, and liquidity crises in businesses continue to afflict the Iranian economy. Although it cannot be denied that the positive effects of economic growth usually appear with a delay, economic growth of over 7% should logically manifest itself in at least a few other economic variables. The statistics that are 'adjusted' and 'revised' have been a subject of dispute among various governmental factions in previous years, and ultimately they have been subject to 'adjustment' and 'revision.' Aside from the shortcomings and inefficiencies of the Iranian statistical system, it should be noted that the process of economic growth in Iran, especially in the post-JCPOA period and the transition from sanctions, is fraught with ups and downs and can undergo changes in the second half of the year. From the government's perspective, in the short term, one of the functions of publishing economic statistics is electoral consumption and convincing public opinion and opponents. In the long term, however, economic growth, due to its positive effects, namely reducing unemployment or increasing the general standard of living and reducing poverty, and finally making the economy productive, is what matters for citizens. The 7% economic growth statistic for the first six months of this year is ambiguous, but even if it is true, although positive, it is not sufficient according to the assessments of the ruling authorities to solve the unemployment problem and improve other economic components. Economic growth must reach over 8% for a prolonged period to create jobs for newcomers to the labor market. This, of course, is conditional on political and economic stability and the availability of resources, especially investment.