World Bank: Iran's Economic Growth Will Reach 4.4 Percent in 2016

The World Bank, in its latest report titled 'Global Economic Outlook', has predicted that Iran's economic growth will reach 4.4 percent this year. This 194-page report, published on Wednesday, June 9, on the official website of this international organization, forecasts that Iran's economic growth will increase to 4.9 percent in 2017 but will again decrease to 4.7 percent in 2018. According to this report, economic growth in the Middle East and North Africa has faced a decline mainly due to reduced activity from oil-producing countries. The surge in Iran's oil production following the lifting of sanctions last January has contributed to improving the country's economic situation. The main reason for the relative improvement in regional economic growth in 2016 is the increase in activities in Iran as the second-largest economy in the region. The World Bank predicts that Iran's economy will witness a 4.4 percent growth this year, which shows an increase compared to the projected 1.6 percent growth for 2015. The economies of oil-producing countries grew by a total of 2.5 percent in 2015, while they had grown by three percent the previous year. In Iran, low oil prices and the uncertain timing of lifting sanctions significantly slowed economic growth. The report adds that the lifting of sanctions has led to the entry of international investors. "Iran's oil production in April this year was 3.6 million barrels, which represents a 25 percent increase compared to the same period last year. The lifting of sanctions has also raised hopes in the financial services, mining and metals, and manufacturing sectors." The World Bank states that while the increase in Iran's oil production may somewhat reduce oil prices in global markets, Iran's return to the global economy is likely to have a negative impact on the economies of other oil-producing countries, including those in the Middle East. Furthermore, the increase in Iran's oil production coincides with Saudi Arabia's announcement in May to increase production in 2016 and the inconclusive meeting of major oil producers in April regarding halting production at January levels, which may lead to further price declines. The report adds that assessing the impact of Iran's reintegration into the global economy through establishing trade relations is a challenging topic; however, for example, if the level of relations returns to pre-sanction levels, EU exports to Iran would double. Additionally, Iran's neighboring countries would also benefit from the increase in trade relations. The World Bank states that as Iran returns to the international economic arena, the country's monetary policy officials must control inflation rates in line with set goals and implement the exchange rate as planned by the end of September to ensure the stability of the banking system. The International Monetary Fund also predicted on April 13 that Iran's economic growth rate in 2016 would be four percent, stating that following the reduction of sanctions, this growth rate would reach 3.7 percent next year.