Iran’s economy has experienced an “impressive recovery” since international sanctions were lifted in January last year and delivered an annual economic growth of 12.5% in the last Persian year ended March 20. According to the Central Bank of Iran, the strong growth was driven by expanded oil sales, which presently make up 30% of Iran’s overall GDP.
US President Donald Trump on October 16 warned that the termination of the Iran nuclear deal is still a clear possibility even though he stopped short of making that move while announcing his new Iran strategy. Trump said he would see what Congress comes up with in terms of fixing the deal—which removes crippling sanctions against Iran's economy in return for an inspection regime designed to bar the country's path to developing a nuclear weapon.
The International Atomic Energy Authority (IAEA) has eight times certified Iranian compliance with the deal. Trump refused to renew White House acceptance of Tehran's compliance when announcing his Iran strategy, thus decertifying the deal but, for now, maintaining American participation in it. The European Union has committed to maintaining the nuclear deal whatever plan Trump eventually pursues, but the worry is that to do so Brussels would have to work out how to deal with fresh American sanctions without putting itself at a great disadvantage.
Trade and investment deals worth many billions of euros struck with Iran by European, Russian, Chinese, Japanese and other companies could be lost, or fail to get signed, if the nuclear deal collapses. But as the US and other deal signatories have continued their dispute over the effectiveness of the deal since Trump arrived in the White House in January, foreign business with Iran has incrementally built up. French energy major Total agreed an initial billion-dollar investment in developing part of the South Pars gas field, while several major credit lines, including a €1bn facility from Austria’s Oberbank and a €500mn financing package from France’s state investment bank Banque publique d'investissement (BPI France), have been opened to assist Europeans doing business in Iran. Even America’s Boeing hopes Trump will eventually let it supply Iran with dozens of new jets, earning the company a handsome profit and creating jobs in the US all at the same time.
Oil exports have surged, enabling Rouhani to point to significant economic progress. Gross domestic product for the first quarter of the Iranian calendar year (started March 21) has come in at 6.5%, its current account surplus rose to around 6% of GDP, and inflation has tumbled from a 2013 high of 45% to below 10%.
Having the second-largest gas reserves and fourth-largest oil reserves in the world has made Iran substantial economic headway largely thanks to a doubling of its oil production since sanctions were removed. Iran’s oil production reached 3.796mn b/d in Q1 2017, rising from 3.741mn b/d in the previous quarter, according to OPEC’s report. Iran's oil output is expected to rise to around 4mn b/d by the end of 2018.
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