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.
The Trump administration on September 14 announced that it is extending sanction waivers for Iran granted under the 2015 nuclear deal, but at the same time it is imposing new measures against several individuals and entities over the Islamic Republic’s ballistic missile development programme. However, the White House was yet to decide on its strategy as to whether the US should preserve its participation in the nuclear deal. Trump, claiming Tehran is violating the deal at least “in spirit”, argue that the JCPOA is not effective enough in containing Iran’s nuclear programme, especially given the widely shared nervousness over Tehran’s expansive role in Syria, Yemen, Iraq and Lebanon. Hardliners in Iran will direct renewed defiance and fury at Trump if his move against the deal results in its collapse.
Donald Trump during his first address to the UN General Assembly on September 19, conflating Iran with North Korea as he called the nuclear deal with Tehran “an embarrassment” to the US. In mid-October Trump must decide whether to again “certify” Iran’s compliance with the nuclear deal. Each issued compliance lasts for 90 days. Trump has twice previously signed off on compliance, but he has indicated that he will not be doing so a third time. If he does not, the issue of Washington continuing to accept the nuclear agreement will be passed to Congress.
All other major powers have remained supportive of the deal, which removed international economic sanctions applied to Tehran in return for a drastic scaling down of Iran’s nuclear programme. They say there is no indication that Iran is breaching its terms and thus moving towards developing a nuclear bomb.
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. Only this month British Airways opened a new office in Tehran, French industrial company Alstom has agreed to invest €1.2bn in Iranian rail wagon maker, while 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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