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IRAN


 

 

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 136,833 107,522 114,100 34
         
GNI per capita
 US $ 2,000 1,710 1,680 110
Ranking is given out of 208 nations - (data from the World Bank)

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Update No: 140 - (26/10/13)

Summary: speculation on a forthcoming grand bargain between Teheran and Washington is beginning to appear in the media, but so far little concrete progress has been made on the Iranian nuclear programme. The Rowhani government is beginning to have an impact on the economic situation, although mostly in terms of an improved mood and optimism over the future.

First, sparse signs of economic improvement
The IMF now forecasts that Iran's GDP will grow 1.3% in 2014, against a 1.5% decline in the current year. The new cabinet plans to carry out four major reforms: the foreign currency market, the cash subsidy payment, the privatization process, and the banking system. For now, however, Rowhani has little to show and could easily become a target of the conservatives if he stepped too far out of the line. The conservative dominated parliament has already reminded him of its power by rejecting three of his nominees to ministerial posts, all reformers. Industrial production has fallen 27% from its peak two years ago, while inflation runs at a yearly rate of 36% now, slightly down on the 39% rate of one month earlier. Yet studies commissioned by Rowhani put the inflation rate at 45%. However there is no question that the Teheran stock exchange has soared 37% since Rowhani’s victory, showing what the business class thought of his predecessor. The other good news so far is that the rial has recovered some ground against the dollar from its low of 36,000 to a dollar of four months ago; it now stands at 30,000 to the dollar. Common Iranians have been buying dollars to hedge against the depreciation of the rial and it is now estimated that Iranian households have stored 18 billion dollars so far. Those who did not have means to protect themselves against the wild inflation have suffered. It is now estimated that the percentage of the population below the poverty line has increased from 22% to 40%. According to a study commissioned by an adviser to Rowhani, the overall level of employment in Iran has gone up by just 140,000 over the last eight years, against claims made by Ahmadinejad of 7 million jobs having been created.

Some more time to wait for the big news
On the nuclear negotiations front, there is a renewed optimism that some breakthrough might be achieved soon, mainly because of an Iranian hint that it may freeze its uranium enrichment. The Obama administration is keen to send Teheran a signal that any concession would be reciprocated and there are efforts to delay the approval of new sanctions against Iran’s oil exports. There already have been intense meetings between the Americans and the Iranians and although the Americans came out of them convinced that the mood has changed, a breakthrough does not seem to be round the corner. The Iranians also say that they have detected a change in the approach of their counterparts. There is still a lot of suspicion towards the Iranians and powerful pro-Israeli / conservative lobbies in Washington pushing against any relenting of the pressure. What the Iranians want (and always wanted) is the abolition of all sanctions against Iran in exchange for de facto giving up their nuclear programme, or placing it under strict scrutiny. What has changed is the way to achieve that – soft diplomacy rather than aggressiveness. Some cynics see a long term strategy of Khamenei in this – since Khatami was not appreciated in 1997-2005, he let the West taste eight years of Ahmadinejad before serving up another moderate and see what kind of welcome he gets. It is worth noting that Rowhani’s candidate to the place of foreign minister, Zarif, despite not being loved by the conservatives obtained a strong approval in the parliament – an indication of Khamenei’s support for the new policy line?

On the internal political front, there are also signs of some modest liberalisation: the conditions of house arrest imposed on the leaders of the Green Movement have been relaxed, although the two men, Mehdi Karrubi and Mir Hossein Mussavi, are not free yet.

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