Iran - Economy

Economy

Main article: Economy of Iran See also: Iranian targeted subsidy plan, Central Bank of Iran, Tehran Stock Exchange, Industry of Iran, Transport in Iran, Communications in Iran, Construction industry of Iran, Privatization in Iran, Foreign Direct Investment in Iran, Tourism in Iran, Economic Cooperation Organization, and Next Eleven

The economy of Iran is the twenty-fifth largest in the world by GDP (nominal) and the eighteenth largest economy in the world by purchasing power parity (PPP). Iran's economy is a mixture of central planning, state ownership of oil and other large enterprises, village agriculture, and small-scale private trading and service ventures. Its economic infrastructure has been improving steadily over the past two decades but continues to be affected by inflation and unemployment. In the early 21st century the service sector contributed the largest percentage of the GDP, followed by industry (mining and manufacturing) and agriculture. In 2006, about 45% of the government's budget came from oil and natural gas revenues, and 31% came from taxes and fees.

Government spending contributed to an average annual inflation rate of 14% in the period 2000–2004. As at 2007, Iran had earned $70 billion in foreign exchange reserves mostly (80%) from crude oil exports. In 2011 GDP was $482.4 billion ($1.003 trillion at PPP), or $13,200 at PPP per capita, signifying a 2% growth in GDP. Because of these figures and the country’s diversified but small industrial base, the United Nations classifies Iran's economy as semi-developed (1998).

About 1,659,000 foreign tourists visited Iran in 2004; most came from Asian countries, including the republics of Central Asia, while a small share came from the countries of the European Union and North America. Iran currently ranks 89th in tourist income, but is rated among the "10 most touristic countries" in the world in terms of its history. Weak advertising, unstable regional conditions, a poor public image in some parts of the world, and absence of efficient planning schemes in the tourism sector have all hindered the growth of tourism.

The administration continues to follow the market reform plans of the previous one and indicated that it will diversify Iran's oil-reliant economy. Iran has also developed a biotechnology, nanotechnology, and pharmaceuticals industry. The strong oil market since 1996 helped ease financial pressures on Iran and allowed for Tehran's timely debt service payments.

Iranian budget deficits have been a chronic problem, mostly due to large-scale state subsidies, that include foodstuffs and especially gasoline, totaling more than $84 billion in 2008 for the energy sector alone. In 2010, the economic reform plan was approved by parliament to cut subsidies gradually and replace them with targeted social assistance. The objective is to move towards free market prices in a 5-year period and increase productivity and social justice.

Over the past 15 years, the authorities have placed an emphasis on the local production of domestic-consumption oriented goods such as home appliances, cars, agricultural products, pharmaceutical, etc. Today, Iran possesses a good manufacturing industry, despite restrictions imposed by foreign countries. However, nationalized industries such as the bonyads have often been managed badly, making them ineffective and uncompetitive with years. Currently, the government is trying to privatize these industries, and, despite successes, there are still several problems to be overcome, such as the lagging corruption in the public sector and lack of competitiveness. Iran ranks 69th out of 139 in Global Competitiveness Report.

Iran has leading manufacturing industries in the fields of car-manufacture and transportation, construction materials, home appliances, food and agricultural goods, armaments, pharmaceuticals, information technology, power and petrochemicals in the Middle East.

  • TSE has been one of the world's best performing stock exchanges in recent years.

  • Iran's trade balance (2000–2007). For the first time, the value of Iran’s non-oil exports is expected to reach the value of imports by 2012.

  • Iranian provinces' contribution to GDP. Tehran host 45% of Iran's industries.

  • Map of Iran's non-oil exports

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