Publication: Iran Economic Monitor, Fall 2018: Weathering Economic Challenges
Loading...
Published
2018-11-28
ISSN
Date
2018-12-19
Author(s)
Editor(s)
Abstract
Iranʼs GDP growth in 2017/18 eased considerably as the effect of large surge in oil revenues in the previous year dissipated. After undergoing an oil-based bounce in the economy in 2016/17, the economy registered a 3.8 percent growth in 2017/18 with the overwhelming majority of growth coming from the non-oil sectors. More than half of the growth can be attributed to services which grew by 4.4 percent. Oil, agriculture and services sectors are now back above the levels of activity they were prior to sanctions in 2012. But there was not a strong bounce back in the past two years for key sectors such as construction and trade, restaurant and hotel services following the stagnation in growth during the period of sanctions. The oil and gas sector witnessed a growth of 0.9 percent.Limited by the (Organization of the Petroleum Exporting Countries) OPEC quota for the agreed period, increasing production capacity or maintaining current production levels in the coming years would require a substantial increase in investments in the sector. However, the reintroduction of sanctions on the oil and gas sector in November 2018 by the United States (US) will mean the issue of export payments rather than investment needs will come to the fore.
Link to Data Set
Citation
“World Bank Group. 2018. Iran Economic Monitor, Fall 2018: Weathering Economic Challenges. Iran Economic Monitor. © World Bank. http://hdl.handle.net/10986/31028 License: CC BY 3.0 IGO.”
Digital Object Identifier
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Iran Economic Monitor, Fall 2016(World Bank, Washington, DC, 2016-09)The economy-wide positive impact of the JCPOA since January 2016 is proving to be slower than expected. Iran’s economy moderated to an estimated annual growth rate of 0.6 percent in 2015 ahead of the implementation of the Joint Comprehensive Plan of Action (JCPOA). Following the removal of nuclear-related sanctions in January 2016, the growth rate is projected to average 4.5 percent in 2016–2018, up from a 0.5 percent average in 2013–2015. Thisprojected recovery which will rely on favorable external factors, is expected to be driven by (i) a significant increase in energy sector activity thanks to the removal of sanctions; (ii) increased inflows of foreigninvestment; and (iii) lower trade and financing costs that will help the non-oil sector contribute significantlyto overall growth and job creation. However, there are significant downsiderisks to Iran’s medium-term outlook. While the January 2016 lifting of the nuclear-related sanctions is expected to reveal the dynamism of the Iranian economy, a large structural reform agenda remains key in moving towards the ambitious growth target under the 6th five year development plan. The plan envisages the implementation of reforms of state-owned enterprises, the financial and banking sector, and a greater emphasis on the allocation and management of oil revenues to productive investments among the main priorities of the government during the five-year period.Publication Iran Economic Monitor, Fall 2017(World Bank, Washington, DC, 2017-11-01)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.Publication Lebanon Economic Monitor, Fall 2014(Washington, DC, 2014-11)A new domestic political stalemate has developed while spillovers from the Syrian conflict further exacerbated. A mid-year lull in the security situation gave a temporary boost to consumer and investor sentiment. Lebanon’s current account deficit remains elevated, albeit lower than during the pre-crisis period. Lebanon’s fiscal position continues to deteriorate. Banque du Liban maintained an expansionary monetary stance to support the economy, while sustaining confidence in the Lebanese pound. Conservatism in financial regulations and private sector banking helped maintain a well-capitalized and resilient domestic banking sector, despite sluggish growth and downgrades by international rating agencies. The expanding political stalemate at home and regional spillovers pose significant downside risk to growth. The Lebanon economic monitor provides an update on key economic developments and policies over the past six months. It also presents findings from recent World Bank work on Lebanon. It places them in a longer-term and global context, and assesses the implications of these developments and other changes in policy on the outlook for Lebanon.Publication South East Europe Regular Economic Report, No. 8, Fall 2015(World Bank, Washington, DC, 2015-09)Economic activity in the six South East European countries (SEE6) is picking up speed, and growth in the region is expected to average 1.8 percent for 2015. The highest growth rates projected are 3.4 percent for Montenegro and 3.2 percent for FYR Macedonia; the lowest is Serbia’s 0.5 percent. Although they trail the rest of the SEE6 region, Serbia and Bosnia and Herzegovina, which were hit heavily by floods in mid-2014, are recovering faster than expected. As 2015 progresses, a recovery in domestic demand is stimulating economic growth throughout the region. Private investment has become the main driver of growth. Developments in the global economy have also helped, especially lower oil prices and a pick-up in demand in the European Union (EU), a major market for the region.Publication Iraq Economic Monitor, Fall 2018(World Bank, Washington, DC, 2018-10)Iraq’s overall security situation has notably improved after the defeat of ISIS, but significant challenges lie ahead. Iraq has witnessed major political and security transitions in 2017 when Prime Minister Al-Abadi announced in December the victory over ISIS after a war that lasted three years. The defeat of ISIS in Iraq left the government with the daunting tasks of rebuilding the country’s infrastructure, reconstruction of liberated areas, establishing security and stability,and providing services for the return of the displaced persons. On May 12, 2018 Iraq voted in parliamentary elections that delivered a win for a political bloc led by Moqtada al-Sadr, while PM Al-Abadi’s bloc, once seen as front runner, came in third. The ballots have been recounted after allegations of fraud and completed on August 8th without major change. On September 15th, Iraq’s parliament elected lawmaker Mohammed al-Halbousi as speaker, marking a major step towards establishing a new government. On October 2nd, Iraq’s parliament elected as president Barham Salih,who immediately named Adel Abdul Mahdi Prime Minister-designate, ending months of deadlock afterthe national election in May.
Users also downloaded
Showing related downloaded files
Publication Taxes, Spending, and Equity: International Patterns and Lessons for Developing Countries(Washington, DC: World Bank, 2025-11-17)Taxes and public spending underpin the basic administration of government and finance the human capital and infrastructure investments needed for economic growth. They can also have a significant and immediate impact on poverty and inequality. The question of how public finance can support longer-term growth objectives while promoting equity has become even more important in recent years, given the high fiscal deficits and debt levels most countries emerged with in the aftermath of the COVID-19 pandemic. These included the increasing cost of debt and the need to restart environmentally sustainable growth while helping households address the learning losses and other social scars caused by the pandemic. This paper examines the global evidence on which households pay which taxes and who benefits from what spending, and critically, the net effect on different households across the income distribution. The aim is to identify the patterns and lessons that emerge for designing progressive fiscal policies. A global dataset of 96 countries is assembled, spanning all regions of the world and all national income levels, grounded in the Commitment to Equity (CEQ) approach to fiscal incidence.Publication Kyrgyz Republic Country Climate and Development Report(Washington, DC: World Bank, 2025-11-03)This Country Climate and Development Report (CCDR) on the Kyrgyz Republic aims to support the country’s development goals amid a changing climate. The CCDR considers two policy scenarios up to 2050: the business-as-usual (BAU) and high-growth scenarios. As it quantifies the likely impacts of climate change on the Kyrgyz economy between now and 2050, the report highlights key government actions to best prepare for and adapt to climate impacts (referred to as “with adaptation” measures), with a particular focus on the time horizon up to 2030. The CCDR also outlines a path to net zero emissions by 2050 (referred to as “with mitigation” measures, “decarbonization,” or, simply, “net zero 2050”), highlighting associated development co-benefits.Publication Direct and Indirect Impacts of Transport Mobility on Access to Jobs: Evidence from South Africa(Washington, DC: World Bank, 2025-11-12)Access to jobs is essential for economic growth. In Africa, unemployment rates are notably high. This paper reexamines the relationship between transport mobility and labor market outcomes, with a particular focus on the direct and indirect effects of transport connectivity. As predicted by theory, wages are influenced by the level of commuting deterrence. Generally, higher earnings are associated with longer commute times and/or higher commuting costs. Local accessibility is also important, especially for individuals with time constraints. Both direct and indirect impacts are found to be significant in South Africa, where job accessibility has been challenging since the end of apartheid. For the direct impact, the wage elasticity associated with commuting costs is significant. Returns on commute are particularly high for women. Local accessibility to socioeconomic facilities, such as shops and health services, is also found to have a significant impact, consistent with the concept of mobility of care. To enhance employment, therefore, it is crucial to connect people not only to job locations but also to various socioeconomic points of interest, such as markets and hospitals, in an integrated manner. This integration will enable individuals to spend more time working and commuting longer distances.Publication Iran Economic Monitor, Spring 2020(World Bank, Washington, DC, 2020-06-21)The recession in Iran accelerated in 2019-20 as United States (U.S.) sanctions further tightened. Inflation has gradually declined as the impact of the sharp depreciation of the rial in 2018-19 dissipated but foreign exchange reserves remain limited. The growing gross borrowing needs has increased the government’s reliance on debt issuance and withdrawals from strategic reserves. Negative economic growth and high inflation coupled with COVID-19 (Coronavirus) will put further pressure on household livelihoods in 2020-21. The current unique situation of Iran’s economy presents significant downside risks for the baseline macroeconomic outlook. The country’s economic and social challenges disproportionately impact the lower income decile households who have faced significant economic pressure. Any increase in the value of cash transfers, along with introducing targeting mechanisms, can help the poor cope with the social-economic shocks, but fiscal constraints may limit the scope for significant response.Publication Digital Africa(Washington, DC: World Bank, 2023-03-13)All African countries need better and more jobs for their growing populations. "Digital Africa: Technological Transformation for Jobs" shows that broader use of productivity-enhancing, digital technologies by enterprises and households is imperative to generate such jobs, including for lower-skilled people. At the same time, it can support not only countries’ short-term objective of postpandemic economic recovery but also their vision of economic transformation with more inclusive growth. These outcomes are not automatic, however. Mobile internet availability has increased throughout the continent in recent years, but Africa’s uptake gap is the highest in the world. Areas with at least 3G mobile internet service now cover 84 percent of Africa’s population, but only 22 percent uses such services. And the average African business lags in the use of smartphones and computers as well as more sophisticated digital technologies that catalyze further productivity gains. Two issues explain the usage gap: affordability of these new technologies and willingness to use them. For the 40 percent of Africans below the extreme poverty line, mobile data plans alone would cost one-third of their incomes—in addition to the price of access devices, apps, and electricity. Data plans for small- and medium-size businesses are also more expensive than in other regions. Moreover, shortcomings in the quality of internet services—and in the supply of attractive, skills-appropriate apps that promote entrepreneurship and raise earnings—dampen people’s willingness to use them. For those countries already using these technologies, the development payoffs are significant. New empirical studies for this report add to the rapidly growing evidence that mobile internet availability directly raises enterprise productivity, increases jobs, and reduces poverty throughout Africa. To realize these and other benefits more widely, Africa’s countries must implement complementary and mutually reinforcing policies to strengthen both consumers’ ability to pay and willingness to use digital technologies. These interventions must prioritize productive use to generate large numbers of inclusive jobs in a region poised to benefit from a massive, youthful workforce—one projected to become the world’s largest by the end of this century.