Sunday, March 30, 2008

Even Bad Numbers Don’t Look So Good

Iran blog: In an article entitled 2008 and The Iranian Economy’s Big Question Mark, described the Iranian economy as experiencing an “exceptionally bad” run. While official figures are unreliable and often padded, this year’s government stats paint a pessimistic mid-term picture. The author warns that a global economic slowdown and a weakening dollar could combine to make 2008 Iran’s “last chance” to use oil proceeds to diversify its economy:

Oil revenues grew by $12 billion to $75 billion in 2007, but real GDP grew only .5%, to 6.7%, indicating “misapplication of oil wealth to the industrial and productive sectors.” MEMRI quotes ISNA as reporting a decline in real GDP from 5.8 to 5.4% from 2006-2007. The same source predicts sanctions will push this figure down to 4.9-5.2% in 2008, and a few tenths of a percent lower annually until 2011 [By comparison, real GDP growth was 4.7% in 1998-1999]. The International Herald Tribune on March 25 quoted Iranian Oil Minister Gholam Hossein Nozari as saying Iran’s daily oil production had reached 4.21 million barrels per day, of which 2.5 million was for export.
Growth in Iran’s oil sector stood unchanged at 5.7 %, “indicating crisis” in Foreign Direct Investment, particularly with respect to resources shared with neighboring states [Tabnak]
Non-oil exports including gas and petrochemical derivatives generated revenue in 2007 of $20 billion. Non-oil related exports (netted of derivatives) totaled $8 billion. By contrast, Iran last year imported $53 billion of foreign goods, putting pressure on domestic manufactures [Tabnak].
The public sector grew last year, tracking an increase of 17% in the national budget [Tabnak].

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