World Bank: Iran's Economic Growth Will Be 4.3% This Year

One day after the release of the report by the Planning and Budget Organization predicting a 5.5% economic growth (including oil) for the next Iranian year, the World Bank published a report on the global economic outlook for this year, estimating Iran's GDP growth at only 4.3%. According to this report published on the World Bank's official website, Iran's economic growth for the years 2019 and 2020 is also projected to be 4.3% each. The International Monetary Fund had also predicted last month that Iran's economic growth rate for this year would be 4.2%. While Iran's own prediction for economic growth (including oil) is set at 5.5%, the Planning and Budget Organization states that it calculated the oil price at $55 per barrel, and if the oil price is considered at $60, economic growth could reach 5.7%. The oil price in the current budget is set at $55. The heavy oil price of Iran is somewhat lower than the benchmark Brent oil price. According to international assessments, such as those from the International Energy Agency, the U.S. Energy Information Administration, and OPEC, the price of Brent crude oil is expected to be around $60 this year. Mehrdad Emadi, an economist and senior expert at the London-based economic and energy consulting firm Betamatrix, stated in an interview with Radio Farda that given the existing political-economic factors, it seems that Iran's economic growth will not exceed 4%. 'Although oil prices this year and next year will be much higher than the previous year, oil prices are not a fundamental factor for Iran's economic growth as they were in past decades, because the country's current expenses, bureaucracy, and inefficiency of government management have risen significantly.' He adds, 'For example, the cost of developing an oil project in Iran has increased 2.5 times over the past 25 years without any increase in efficiency. Although oil prices have risen, current expenses and the government's commitments to pension funds and banks, which are economic black holes in terms of the government's debt to these institutions, have also increased.' According to Mr. Emadi, the second issue is the threat posed by Donald Trump, the President of the United States, to withdraw from the JCPOA if its 'flaws' are not resolved, which has placed Iran's economy under the shadow of sanctions. He adds, 'Recently, Britain and Germany have also decided to increase sanctions on Iran without dismantling the JCPOA to show that they are not indifferent to Iran's missile activities and regional interventions. It seems that Trump's goal is to pressure other countries, including China, to reduce trade with Iran, especially its oil purchases, which could have devastating effects on Iran's economy.' Iran's economy saw a significant surge in 2016, the year sanctions were lifted, due to a sharp increase in oil exports. According to statistics from the Central Bank of Iran and the International Monetary Fund, Iran's GDP grew by 12.5% that year, with the added value of oil at 66%. However, last year, the added value of oil was only 6.6% as Iran's oil production and exports had reached their maximum capacity with little increase in production. Meanwhile, the World Bank even assessed Iran's economic growth in 2016 at 13.4%, but this figure dropped to 3.6% last year. According to the World Bank report, global economic growth this year is also expected to be 3.1%, which is 0.1% higher than last year, and this growth is expected to remain around 3% for the next two years. The report states that the global economic outlook for this year is 'bright' as the economies of European countries, the United States, and emerging economies have shown significant improvement.