Iran skyline

Iran Economic Forecast

Iran Economic Outlook

Economic activity so far this year has exhibited a dual picture. On the one hand, the non-energy sector has likely been constrained by one of the region’s highest inflation rates, water shortages dampening agricultural output, and socially repressive government policies aimed at quelling unrest. In contrast, the energy sector has gone from strength to strength thanks to surging oil purchases from China, Iran’s exclusion from OPEC+ production cuts and a looser enforcement of U.S. sanctions. Oil output increased uninterruptedly from January to 2.83 million barrels per day (mbpd) in July, the highest level since late 2018; in the same month, oil exports to China more than doubled year on year. In August, the U.S. agreed to unfreeze USD 6 billion in Iranian assets held abroad, which will boost Iran’s FX reserves. Further piecemeal sanctions relief is on the cards ahead.

Iran Inflation

Inflation rose to 39.7% in August from 39.4% in July but is still down around 15 percentage points from its April peak. The Consensus is for inflation to average the second-highest in the region this calendar year due to sustained money printing—in part to finance the large fiscal deficit—and a weaker average parallel-market FX rate compared to last year.

This chart displays Economic Growth (GDP, annual variation in %) for Iran from 2013 to 2022.

Iran Economic Data

2018 2019 2020 2021 2022
Population (million) 82.1 83.1 84.0 84.8 85.7
GDP (USD bn) 246 242 196 289 352
GDP per capita (USD) 3,001 2,909 2,327 3,410 4,110
GDP (IRR tn) 21,627 27,364 40,791 66,775 104,383
Economic Growth (Nominal GDP, ann. var. %) 29.2 26.5 49.1 63.7 56.3
Economic Growth (GDP, ann. var. %) -1.8 -3.1 3.3 4.7 2.5
Private Consumption (ann. var. %) -1.7 -4.8 0.5 3.9 3.7
Government Consumption (ann. var. %) -1.7 -5.8 -0.9 8.3 0.5
Fixed Investment (ann. var. %) -15.4 -7.0 3.2 0.0 3.9
Exports (G&S, ann. var. %) -4.4 -17.3 -12.8 5.2 7.3
Imports (G&S, ann. var. %) -26.3 -32.5 -29.7 24.1 9.2
Industry (ann. var. %) -9.1 -9.7 7.8 3.2 4.4
Oil Production (mn barrels per day, aop) 3.6 2.4 2.0 2.4 2.6
Unemployment (% of active population, aop) 12.1 10.7 9.6 9.2 9.0
Fiscal Balance (% of GDP) -1.6 -4.5 -5.8 -4.2 -4.0
Public Debt (% of GDP) 42.9 46.7 48.3 42.4 -
Money (ann. var. of M2 %) 22.1 28.2 38.4 41.4 -
Inflation (CPI, ann. var. %, eop) 37.4 27.8 44.8 34.2 45.6
Inflation (CPI, ann. var. %, aop) 18.0 40.0 30.5 43.6 41.9
Exchange Rate (IRR per USD, eop) 42,025 42,026 42,023 42,025 42,026
Exchange Rate (IRR per USD, aop) 40,833 42,025 42,026 42,026 42,024
Current Account Balance (USD bn) 26.2 -1.7 -0.7 11.1 -
Current Account Balance (% of GDP) 10.7 -0.7 -0.4 3.9 -
Merchandise Trade Balance (USD bn) 30.8 1.9 3.2 15.8 -
Merchandise Exports (USD bn) 92.7 60.0 49.8 79.5 -
Merchandise Imports (USD bn) 61.8 58.1 46.6 63.6 -
Merchandise Exports (ann. var. %) -3.5 -35.3 -16.9 59.4 -
Merchandise Imports (ann. var. %) -16.2 -6.1 -19.8 36.5 -
Foreign Direct Investment (USD bn) 2.4 1.5 1.3 1.4 1.5
International Reserves (USD bn) 122.5 15.0 13.8 17.7 25.4
International Reserves (months of imports) 23.8 3.1 3.5 3.3 -
External Debt (USD bn) 5.8 4.9 5.4 10.3 -
External Debt (% of GDP) 2.3 2.0 2.8 3.6 -

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