Central Bank Reports Increase in Iran's Economic Growth in 2017

The Central Bank of Iran announced that the economic growth rate for the past year, 1396 (2017), was 3.7 percent. Meanwhile, the Minister of Economy attributed the disruption of market order in the country to 'psychological factors and the movement of capital towards substitute goods.' According to Fars News Agency, the Central Bank reported that Iran's gross domestic product (GDP) at constant prices from 2011 increased from 669 trillion tomans in 2016 to 694 trillion tomans in 2017. The Central Bank attributed the increase in economic growth to the rise in value added from activities such as transportation, warehousing, communications, industry, trade, and hospitality. The report indicated that the value added in the industrial sector increased by 5.1 percent, agriculture by 3.2 percent, and services by 4.4 percent. However, the value added in the oil sector was reported to have increased by only 0.9 percent. The report also noted that in the fall and winter of that year, due to a decrease in crude oil exports, gas condensate, and refinery products, this sector faced a decline in value added growth. While the Central Bank emphasized the role of value added growth in sectors such as industry and services in boosting economic growth, other reports, including those from OPEC, indicate that oil's contribution to Iran's GDP growth has been significant. OPEC announced on June 8 that Iran's GDP in the previous calendar year was $447 billion, up from $419 billion the year before. The report stated that total oil and non-oil exports from Iran in 2017 grew by 18 percent to nearly $111 billion, with about half of that related to oil revenues, which saw over 28 percent growth. In recent years, some members of the Iranian parliament, including Gholamreza Mesbahi Moghadam, have criticized the government's method of calculating economic growth and expressed doubts about the reported increase in this rate. Meanwhile, some analysts believe that the effects of the U.S. withdrawal from the JCPOA will negatively impact Iran's economic growth and other economic indicators. The International Energy Agency has predicted that Iran and Venezuela's oil production could decline by up to 30 percent under U.S. sanctions and poor economic conditions in the coming year. The U.S. exit from the JCPOA has already affected the state of currency, car, household appliance markets, and other sectors of Iran's economy. However, President Hassan Rouhani stated on Thursday that the currency crisis in Iran is due to a 'psychological war' from foreign media or 'unknown media.' Economy Minister Masoud Karbasian also adopted the President's stance on Friday, defending his previous statements that 'the economy is doing well' by referring to macroeconomic statistics. He attributed the disruption in market order to 'psychological factors and the movement of capital towards substitute goods' such as gold, cars, and housing. Karbasian suggested that addressing this issue requires 'attention to the realities of the country's macroeconomics' and noted that the government is trying to direct capital towards productive markets, as evidenced by the recent growth in the stock market index. Since the beginning of this week, the currency price has risen again, with the dollar exceeding 7,500 tomans. Fluctuations in the currency market have also led to increases in the prices of gold, coins, electronics, and household goods, with some car prices rising by 2 to 40 million tomans in the past ten days. Some analysts speculate that following the U.S. exit from the JCPOA and the reinstatement of sanctions against Iran in the coming months, the country's economic situation may experience a shock, leading to widespread protests. It seems that this prediction is why the Friday prayer leader of Mashhad warned the people against 'standing against the regime' due to economic problems. Ahmad Alamolhoda, the Friday prayer leader of Mashhad, stated: 'People should not lose their resistance in the face of economic pressure and should not confront the regime.' The Supreme Leader of the Islamic Republic also mentioned on Tuesday, June 4, that 'enemies are exerting three types of economic, psychological, and practical pressure' on the Islamic Republic and that through 'economic pressure and sanctions, they aim to wear down the Iranian nation.' He also claimed that 'exploitation' of public protests and 'creating chaos' in Iran is 'the enemies' definitive plan.' Before the Supreme Leader, the head and spokesperson of the judiciary warned about the 'exploitation' of protests by the U.S. and Israel and threatened that security institutions would deal with 'violators' and protests that 'disturb the country's security.'