Iranian Growth Accelerated in 2016
The International Monetary Fund recently released its estimates for first half 2016/17 economic growth in Iran to come in at more than 7.7% and estimates it will increase by 6.6% in the full current year.
Iran’s economy has been held back in recent years by the twin shocks of sharply lower oil prices and a sanctions regime imposed by the United States and Europe. While some easing of the sanctions has been beneficial to Iran, a significant part of the increased growth was due to a better oil market, with non-energy sectors growing at only 0.9% year over year.
The country has yet to benefit from an easing of the sanctions regime, excepting a greater ability to sell oil to foreign buyers. Investment in Iran from the west has been sluggish as firms continue to handicap how the Trump administration will deal with Iran and whether or not punitive sanctions will be re-imposed on Iran.
In another positive development for the country, inflation fell below 10% to 9.5%. Still, most ordinary Iranians are still waiting to personally benefit from a more robust oil market and the lifting of some sanctions and the job market in Iran continues to be challenging.