Research Center Predicts Economic Growth Rate: Between -0.5% and -2.8%

The Research Center of the Iranian Parliament has released a report predicting that Iran's economic growth rate, affected by the U.S. exit from the JCPOA and the imposition of economic sanctions, will decline by the end of this year to between -0.5% and -2.8% under optimistic and pessimistic scenarios, respectively. In this report, the growth rate of Iran's economy without the oil sector is predicted to be 1.9% and 0.8% under the optimistic and pessimistic scenarios, respectively. Based on these two hypothetical scenarios, the economic growth rate for the next solar year is estimated to be between -3.8% and -5.5%. These predictions and assessments from the Research Center of the Parliament regarding the state of Iran's economy are calculated without considering any potential actions by the government to counter the effects of U.S. economic sanctions against Iran, depicting a situation where 'the government has no active policy to neutralize and actively counter the sanctions.' The various scenarios in this report are based on the European Union's compliance with the U.S. in imposing sanctions against Iran or relative cooperation of this union with Iran. According to the first scenario or the optimistic scenario, Iran's oil exports will face a decline of 500,000 barrels per day in the second half of the year. Other assumptions of this scenario include a 22% drop in car production since this summer, a 2.5% decline in other industries except for food, chemical, and basic metals, and a 9% decrease in imports in the second half of the year. The most significant assumption of the second scenario or the pessimistic scenario is a daily reduction of one million barrels in Iran's oil exports in the second half of the year. Other assumptions of this scenario include a 45% drop in car production since this summer, a 5% decrease in other industries except for food, chemical, and basic metals from the second half of the year, and an 18% reduction in imports in the second half of the year. A few days ago, Reuters reported a significant and continuous decline in Iran's oil exports in recent months following the U.S. exit from the JCPOA and the re-imposition of sanctions against Iran. After exiting the JCPOA, the U.S. announced its intention to stop all of Iran's oil exports but later stated that it aimed to significantly reduce Iran's exports and increase the number of countries that have stopped buying Iranian oil. In mid-November, the second phase of U.S. sanctions against Iran, which mainly focuses on the oil and gas sector and Iran's banking relations, will be implemented. The report from the Research Center of the Islamic Consultative Assembly examines the impact of economic sanctions against Iran through various means, the most important of which are the effects of sanctions on the oil and gas sector, the banking system and the central bank, key industries, international transportation, and insurance. The report recommends that the government prioritize its policy-making on reducing dependence on imports and implement policies to activate sectors that have stronger ties with other economic sectors, with particular emphasis on the housing sector. Iran's economy also experienced negative growth rates of -6.8% and -1.9% in 2012 and 2013, respectively, mainly due to economic sanctions. The signing of the JCPOA and the economic openings that followed it were accompanied by an increase in the added value of Iran's oil and gas sector, ultimately resulting in a growth rate of 12.5% for Iran's economy. According to the Central Bank, Iran's economic growth rate last year was 3.7%. In this context, the Parliament also dismissed President Rouhani's Minister of Economy.