Iran's economic growth in spring 1405 recorded a negative 10.1 percent, reaching the lowest level in the last 7.5 years. This figure is the lowest recorded economic growth since autumn 1397. Investigations indicate that the severe decline in oil and gas production, influenced by wartime conditions, has been the most significant factor in the reduction of economic growth.
Decline in Gross Domestic Product and Its Impacts
According to published statistics, economic growth excluding oil also reached negative 4.6 percent in this quarter. In this context, most economic sectors, especially the "Industries and Mines" group, faced negative growth, with only the "Agriculture" sector being an exception with a positive growth of 2.3 percent. Following military attacks in late 1404, the effects of war on economic activities were not noticeable in winter, but now the decline in gross domestic product in spring 1405 indicates the impact of infrastructure destruction and maritime blockade on the country's economy.
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According to the Statistical Center of Iran, the value of gross domestic product decreased from 2425 trillion tomans in spring 1404 to 2179 trillion tomans in spring 1405. This decline is mainly due to reduced production in the industries and mines group, during which oil and gas extraction-related productions faced a decline of more than 20 percent.
Details of Gross Domestic Product and Recession Factors
The gross domestic product at constant prices of 1400 reached 2179 trillion tomans in the first three months of 1405, and without accounting for oil, it reached 1722 trillion tomans. These figures were 2425 and 1804 trillion tomans in the first three months of the previous year, respectively. The industries and mines group experienced the most significant decline at 14.7 percent, while oil and natural gas extraction decreased by 26.4 percent and natural gas distribution by 21.3 percent. Additionally, the services sector faced negative growth of 4.8 percent, with transportation, warehousing, and communications recording the highest decline at 17 percent.
According to the data, oil and gas extraction alone accounted for 6.74 percentage points of the 10.1 percent decline in GDP. This indicates Iran's economy's heavy reliance on the oil sector and the negative impact of falling oil production and exports on economic growth. However, the share of oil in gross domestic product decreased from 25.6 percent in spring 1404 to 21 percent in spring 1405.
Analysis of the annual growth history of gross domestic product shows that since 1400, the annual growth of non-oil sectors has consistently been below 3 percent. In this regard, the annual GDP growth without oil from 1400 to 1404 was approximately 2.2, 2.5, 1.9, 2.1, and negative 0.3 percent, respectively. The main reasons for this performance can be traced to sanctions and foreign trade restrictions, weak investment and capital depletion, shortages of electricity and gas, and high uncertainty.
In spring 1405, the decline in foreign trade was one of the most important factors weakening economic growth, with exports of goods and services decreasing by 35.7 percent. Meanwhile, imports also fell by 14.8 percent. Additionally, private final consumption decreased by 4 percent and government consumption by 1.7 percent.
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