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Iranian Economy in Doldrums ?

March 23, 2014 by KRS Leave a Comment

In Iran, hopes fade for surge in the economy

  • The effects of international sanctions and mismanagement has made Iran’s economy suffer.
  • Mr.Rouhani was voted by Iran’s impoverished middle class as he promised to reignite growth by restoring ties worldwide.
  • Its been 6 months since he came into power and hopes of economic recovery are fading among Iranians, business owners and investors as the government is facing a financial crunch.
  • Although he managed to stabilize the national currency, halt inflation & forge a sanction-free temporary nuclear deal, not much progress is seen.
  • Owing to lack of petrodollars & declining tax revenues, the start of Iranian New Year will see phasing out subsidies on  energy and ìncrease in prices of gasoline, electricity &other utilities by 90%.
  • Due to shortage of funds the government needs to wind up a system of $12 monthly payments to nearly 60 million Iranians among the poorest.
  • Rouhani’ s government should reduce inflation rate from 32% – 42% currently to 25% next year.
  • The government was forced to sell dollars on the open market to support the rial during elections.
  • The inevitable  subsidy cut has resulted in markets losing faith in government’s ability to get economy going.
  • Protesters set fire to many gas stations when gas prices were raised and rations imported in 2007.
  • The government faces rise in inflation if it resorted to printing money incase of a budget deficit which was seen during Ahmadinejad administration.
  • Rouhani’s aim is to improve international relations and trade to lift the economy, but the supreme leader Ayotallah dreams of a parallel economic plan based on self-sufficiency & also to build a resistance economy where the country depends on itself , striving for near self-sufficiency in “strategic and primary items.

Exams Perspective:

  1. State of Iran’s economy

Filed Under: Current Affairs, International Tagged With: State of Iran's economy

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