Iran’s latest growth figures, attributed to the Central Bank and circulated unofficially through local media, confirm that the economy has remained stuck in recessionary territory during the first half of the current Iranian year (March–September 2025).According to the reported data, gross domestic product contracted by 0.6% in the six months to September, while non-oil GDP declined by 0.8%. Although the numbers have yet to be formally published, they offer a revealing snapshot of the economy’s underlying momentum and, more importantly, frame expectations for growth over the rest of the year and beyond.The figures suggest that weakness in Iran’s real sectors has persisted despite intermittent support from oil. Data released earlier by the Statistical Center of Iran showed that in the summer quarter, GDP growth with oil stood at just 0.3%, while non-oil output remained in negative territory at minus 0.4%. Together, these indicators point to subdued effective demand, falling investment and heightened uncertainty across production-oriented sectors.Sectoral performance highlights the uneven nature of growth. Agriculture recorded a contraction of 2.9% in the first half, reflecting a mix of climatic pressures, lower productivity and constraints in access to key inputs. More concerning is the performance of industries and mining, traditionally Iran’s main growth engine, which shrank by 3.4%. Energy shortages, elevated production costs, weak domestic demand and declining capital expenditure have continued to weigh on industrial output.Bright Spot Oil remains the lone bright spot, posting growth of 1.1% over the same period. However, this modest expansion has not been sufficient to offset contraction elsewhere. Moreover, economists caution that oil’s contribution to short-term growth is increasingly constrained by difficulties in monetizing export revenues, limiting its ability to stimulate broader economic activity.The sharpest contraction was seen in construction, which posted a steep 12.9% decline. As a labor-intensive sector with strong linkages to upstream and downstream industries, construction plays a critical role in employment and demand generation. Its deep slump reflects falling household purchasing power, soaring material costs, high financing rates and uncertainty about future economic conditions—factors that could continue to suppress growth in the coming quarters.Against this backdrop, growth forecasts by official and semi-official institutions remain pessimistic. The Plan and Budget Organization projects a contraction of 0.3% for the full year, while the Higher Institute for Management and Planning Research forecasts minus 0.7%. The Central Bank’s own estimate is even more downbeat, at minus 1.4%. Looking ahead to next year, projections diverge but remain weak: the PBO anticipates 1.9% growth, the research institute expects 0.5%, and the Central Bank forecasts another contraction of 0.6%.Lost Decade Even the most optimistic scenario falls well short of Iran’s development ambitions. The Seventh Development Plan targets an average annual growth rate of 8%, a goal that already appears unattainable for both the current and coming year. After what many economists describe as a “lost decade” in the 2010s, the economy would need sustained high growth to recover lost ground—something current fundamentals do not support.Investment trends are particularly worrying. According to the Statistical Center, gross fixed capital formation declined by 3.4% in the first half, signaling weak productive capacity and limited growth potential in the medium term. Economists stress that while short-term growth remains heavily dependent on oil exports, long-term expansion hinges on restoring investment confidence.Persistent macroeconomic imbalances, budgetary and banking sector strains, and elevated political and external risks continue to undermine expectations. Without progress on stabilizing the macro environment, easing uncertainty in foreign relations and improving access to oil revenues, Iran’s growth outlook is likely to remain fragile, with downside risks dominating the forecast. (ICE TEHERAN)

Fonte notizia: Financial Tribune