Iran says economy grew during pandemic on industry, farming

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Published 13 Dec,2020 via Bloomberg Markets - Iran’s economy grew 1.3% in the six months to mid-September compared with the same period last year, despite an ongoing struggle with the Middle East’s worst coronavirus outbreak and crippling U.S. sanctions.

Abdolnaser Hemmati, head of the Central Bank of Iran, attributed the recovery to a boost in manufacturing and agriculture, plus improved cash flow at the country’s banks. Non-oil gross domestic product grew 1.4% from a year earlier, Hemmati said in a statement posted on Instagram on Sunday.

It’s unclear whether the calculation accounts for inflation, which soared more than 30 percentage points to 41% in 2019, according to the International Monetary Fund. The period under review coincides with the first half of the Iranian calendar year, which started on March 21.

Coronavirus policy may also have been a factor. Ill-equipped to effectively manage or control its virus outbreak, Iran eased its first lockdown in the first week of April, well ahead of most other countries, in an effort to keep its economy afloat.

The Islamic Republic has tried to develop its domestic manufacturing base and services sector as part of a broader national policy of building a “resistance economy” that is less dependent on oil and better-shielded from U.S. sanctions imposed by U.S. President Donald Trump.

The policy also includes a drive to increase non-oil exports to regional neighbors after Trump’s campaign to crush the Iranian economy sent the value of the rial plummeting and caused output to contract 6.5% in 2019.

In October the IMF forecast that Iran’s real economy would shrink by 5% by the end of 2020, making it the second-best performing oil exporter in the Middle East after Qatar. The lender also predicted that of the region’s oil-exporting countries, Iran and Algeria would make the strongest recovery, both growing 3.2% in 2021.

Earlier on Sunday, Iran set out ambitions to raise oil production next year, assuming Joe Biden will loosen U.S. sanctions after he becomes president.

Oil Minister Bijan Namdar Zanganeh told lawmakers on Saturday that Iran planned to export 2.3 million barrels a day from March 2021, compared to just 133,000 according to the latest data compiled by Bloomberg. Almost all of Iran’s shipments go to China.

Iran’s oil revenue, once its single-largest source of foreign currency, has nose-dived since Trump withdrew from the 2015 nuclear deal and imposed sanctions.

Biden has said he wants to bring the U.S. back into the accord and lift penalties if the Islamic Republic also returns to full compliance with the agreement.

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