Iran’s economic output grew 1% in the first half of the current fiscal year (started March 21), preliminary data released on Monday by the Statistical Center of Iran showed, as growth in agriculture and services outweighed a contraction in industrial output.

The growth came from a 5.7% increase in the agricultural sector’s output and a 0.9% growth in the services sector, making up 9% and 50% of the economy respectively.

Industrial output, which accounts for 40.7% of gross domestic product, however, contracted 1.1%, as low consumer demand and financing shortages kept the sector depressed.

Iran’s GDP expanded 3% in 2014, after a 1.9% contraction in 2013 and a 6.6% contraction the year before. Economists fear Iran may dip back into recession this year, as sanctions, low consumer demand and a squeeze on lending keep weighing on industries and services.

To counter this, the government is easing monetary policy—aiming to lower interest rates and boost consumer demand—ahead of a much anticipated easing of sanctions that would lead to the release of Iran’s frozen assets and open the floodgates of foreign investments.

By Financial Tribune