Iran to see MENAP’s largest non-oil GDP share increase
Baku, Azerbaijan, Oct. 19
By Mehdi Sepahvand, Dalga Khatinoglu – Trend:
Iran is projected to experience the largest growth in the contribution of the non-oil sector to its gross domestic product in the 2021 outlook.
This year Iran saw a huge rise in oil share of GDP. The country’s headline growth has been revised up to 4.5 percent this year, owing to faster-than-expected increases in oil production and exports following the unwinding of sanctions.
Oil output has risen to 3.6 million barrels per day, resulting in positive spillovers to the non-oil economy, although the recovery in oil output is expected to taper sharply next year as production approaches pre-sanctions levels, the International Monetary Fund recently said.
Iran is surely planning to give its oil industry a huge boost with investments brought in the wake of the sanctions relief.
However, the government is intent upon using the opportunity to diversify its GDP composition as well in a bid to reduce its dependence on oil revenues.
A point to mention here, however, is that the Iranian Oil Ministry names gas condensates as non-oil commodity. While Iran’s oil export stands at 2.5 million bpd as of October, its gas condensate export stays at 500,000 bpd.
As can be seen from forecasts summarized in the table below, the country’s non-oil share in GDP growth in the 2021 outlook will be greater than all other countries in the MENAP (Middle East, North Africa, Afghanistan and Pakistan) region.
The growth dividend from the lifting of sanctions is materializing only gradually, with investors remaining cautious, and reintegration into global financial markets and domestic reforms are proceeding slowly.
Iran’s real GDP growth stood at 4.3 percent in 2011-2012. It dropped sharply to 1.9 percent in 2013, to rise again to 4.3 percent in 2014. In 2015, the number stood at 0.4 and is expected to be registered at 4.5 for 2016. In 2017, it is expected to register 4.1.