Iran Economic Monitor, Fall 2017 : Sustaining Growth - The Challenge of Job Creation
The Iran Economic Monitor provides an update on key economic developments and policies over the past six months. It examines these economic developments and policies in a longer-term and global context, and assesses their implications for the outlo...
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| Format: | Report |
| Language: | English |
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World Bank, Washington, DC
2018
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| Online Access: | http://documents.worldbank.org/curated/en/347831520515722711/Sustaining-growth-the-challenge-of-job-creation http://hdl.handle.net/10986/29440 |
| Summary: | The Iran Economic Monitor provides an
update on key economic developments and policies over the
past six months. It examines these economic developments and
policies in a longer-term and global context, and assesses
their implications for the outlook for the country. Its
coverage has ranged from the macro-economy to financial
markets to indicators of human welfare and development. This
edition covers the economic growth of Iran for the year
2016. Growth performance in 2016 exceeded expectations based
on the bounce back in oil production and exports. The
economy registered a record growth rate of 13.4 percent
according to the new GDP data published by the Central Bank
of Iran. While Iran’s economy is relatively diversified for
a resource-rich country, oil proceeds still play a crucial
role in public finances and external accounts. Iran’s
ability to increase production in 2016, despite the cuts
agreed to by the rest of the OPEC members helped bring
production near its pre-sanctions levels. The surge in
exports led to an improvement in the current account
surplus, to 3.9 percent of GDP in 2016, as growth in imports
remained stagnant. Increased oil production and exports
brought an increase in government revenues, however, the
improvement was not enough to offset the widening
expenditures; the fiscal deficit grew from 1.7 percent in
2015 to an estimated 2.2 percent in 2016. Creating fiscal
space for growth will be important especially in view of the
expected burden from securitization of government arrears
and growing pension system liabilities. Iran managed to
achieve single digit inflation in 2016, but inflationary
pressures resurfaced towards the end of the year and in
early 2017, as liquidity rose and the Iranian Rial continued
to depreciate. Job creation remained limited. In the
medium-term, the growth rates are expected to revert to an
average of 4 percent, reflecting modest reintegration with
the global economy in banking, trade and investment. There
are significant downside risks, both domestic and external,
to this moderate medium-term outlook. |
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