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June 2017, No. 84


Opinion

The Economy Is Not Feeling Well Yet!


Iranís economy since the past years has been dependent on oil and the overflow of the surplus revenues in this sector has resulted in public investment in sectors such as industry.


By: Dr. Jamshid Pajuyan 

The economic growth rate of 2.7% can be promising for a country provided that real growth takes place in all sectors rather than growth in one sector would cover up failure in other sectors. One could be delighted over such an economic growth when the growth is balanced and based on sound orientations; but this is not the case with the economic growth of the first three quarters of the current calendar year. We owe this growth not to sound planning but to the lifting of the sanctions and resumption of oil exports.

Next year the situation will change again. In relation to the statistics announced by different agencies always some debates may arise which is to some extent due to lack of disclosure of precise indicators of all the sectors.

Iran Statistics Center (ISC) in a report has announced the economic growth rate of the first three quarters of the current calendar year at 2.7%. This figure is of course very appropriate for the economic growth but when its impacts cannot be felt or observed in the economy, questions would come up. According to the ISC report, the growth rate of significant sectors such as housing and mining in the current year has been negative and the growth rate of the industry sector is less too meager to attract attentions and the total growth rate of the three sectors is negative.

However, the growth rate of over 85% of the oil sector put the economic growth up. Of course this is indicative of the significant role oil plays in Iranís economy as a whole which is considered alarming. The growth of gross oil production has been the most important achievement of the nuclear talks with P5+1 and at present the current output in this sector has not reached that of 1391 (2012-2013) and in comparison with the previous year has passed behind such growth. In addition, it should be noted that oil has not such an outstanding share in providing employment. Out of 22 million working, only 200 thousand are active in the oil-related sectors. Also, the pre and post-oil relations with other sectors of Iranís economy is meager and for this reason growth in this section is noticeable only in indicators and not in daily life.

In the agriculture sector, economic growth is only due to the huge guaranteed purchase of wheat cultivators products by the government. Several billion tomans have been spent on wheat purchase and still the growth of this sector is 5% which in fact shows that problems of the agriculture sector are so serious that huge purchases cannot open the way to obtain a cross-sectional growth. Iranís economy since the past years has been dependent on oil and the overflow of the surplus revenues in this sector has resulted in public investment in sectors such as industry. The result was that in the past 80% of the countryís industry was in the hand of the government.

Of course during this period privatization has been implemented but unfortunately the major part of the new industry owners have acted so inefficiently that it was hoped the industry would have remained in the hands of the government. On the other hand, this practice led to the emergence and institutionalization of problems in the economy which could be clearly seen today. With the study of various aspects, it should be said that the growth rate in 1395 (2016-2017) is by no means a source of honor and thus cannot be relied upon. Iranís economy is still suffering from recession and thus a solution should be thought for it. Letís not forget that the economy is not feeling well yet!

 

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  June 2017
No. 84