Tehran, Iran, August 31
By Mehdi Sepahvand - Trend:
Iran’s economy is going to contract the Dutch disease if oil revenues continue to swell as they do now, an Iranian economic official has said in what seems to be euphemism for a situation that is already the case.
“It should always be feared that organizational weakness and excess reliance on oil revenues may eventually lead the country into the Dutch disease,” Deputy Minister of Economy Hossein Mirshojaian said, Mehr reported August 31.
In economics, the Dutch disease is the apparent causal relationship between the increase in the economic development of a specific sector (for example natural resources) and a decline in other sectors (like the manufacturing sector or agriculture).
“The problem will become more serious if the government adopts populist policies. It will then have to resort to oil revenues more,” Mirshojaian said.
He went on to underline that the incumbent administration has established a good monetary discipline to avoid such problems.
Iran’s oil revenues have risen since January when the country started increasing its oil export after the lifting of sanctions. In the course of few months, Tehran’s oil sale jumped from 1 mbpd to 2.1 mbpd.
The Statistics Center of Iran reported a GDP growth of 1% for the Iranian fiscal year 1394 (March 2015-16), almost entirely driven by a strong agricultural sector. The non-oil sector growth rate was 0.9%.
Surprisingly, the center recently said Iran’s GDP growth reached 4.4 percent during the first three months of current fiscal year (March 20-June 20), something that seems to come mostly from oil and gas condensates exports, although the government classifies gas condensates as non-oil goods.
The highest year-on-year growth for the period between March and June this year was related to the education sector, with a 20.9-percent growth, and the lowest growth was related to the manufacturing sector, with a -1.3-percent growth.