The London-based consultancy originally predicted GPD growth in Iran at 5.4 per cent for 2003/04 before revising it upwards to 6 per cent last December, when it also forecast Iran's GDP growth easing to 3.5 per cent next year.

In its latest global forecast, the EIU suggested that its increased forecast was partly owing to strong growth in oil production but mainly due to strong domestic demand in Iran, which has benefited from easing import restrictions and subsequent growth in non-oil industrial and manufacturing activity.

For 2004/05, it believed that in the case of Iran, a reduction in oil sales due to expected OPEC cuts was likely to lead to some controls being re-introduced to slow import spending growth, curtailing the availability of inputs and thus squeezing the non-oil sector.

Iran's predictions compared with GDP growth in the Middle East expected to average 3.9 per cent this year, 3.6 per cent next year and 4.4 per cent in 2005/06.

The EIU's latest forecast steeply revised upwards the average price of dated Brent crude to Dlrs 27 per barrel for 2004 compared with its previous prediction of Dlrs 24.90 per barrel.

It the case of occupied Iraq, it estimated that GDP growth contracted by 21.8 per cent last year due to significant falls in oil production and export levels.

But the London-based consultancy expected Iraq growth would be around 45 per cent this year even though Iraq's oil output was unlikely to reach pre-war levels until the second half of 2004.