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flag Iran Iran: Economic and Political Outline

In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline

 

Economic Indicators

The Iranian economy is largely dominated by the public sector which controls nearly 80% of it. The private sector is therefore relatively limited. The economy is very dependent on the oil income, which in 2013 represented almost 80% of its revenues. In this context, an increase or a decrease in oil prices can have a great influence in the state's revenues. In order to diversify its economy and become less dependent of its oil sector, the government has decided to privatize and open to foreign investment most of the sectors of its economy. However, the progress on this issue has been slow and hampered by political tension and international sanctions related to the development of the national nuclear industry.

Reforms are nevertheless essential. The public sector no longer has the resources to create the jobs required to reduce the unemployment rate, which was 15% of the active population in 2013 (over 30% among the youth). The other major problem in the country is a huge inflation (26.5% in 2012 and more than 50% in 2013) which sharply increases the prices of consuming goods, and this creates social problems and fears of public riots.

The country is entering its second year in recession with a negative growth of 1.5% in 2013 and a forecast of -1.2% for 2014, a figure lower than the regional average and insufficient to compensate an  inflation that may remain above 40% in 2014.

Galloping inflation and rising unemployment lead the country's workforce, especially the young, to leave Iran.

 
Main Indicators 20112012201320142015 (e)
GDP (billions USD) 541.11398.03367.10e402.70417.27
GDP (Constant Prices, Annual % Change) 3.9-6.6-1.9e1.5e2.2
GDP per Capita (USD) 7,2005,237e45,1655,284
General Government Gross Debt (in % of GDP) 9.211.811.3e11.2e11.1
Inflation Rate (%) 21.530.534.719.8e20.0
Unemployment Rate (% of the Labor Force) 12.312.210.411.612.2
Current Account (billions USD) 59.3826.2727.41e17.01e6.92
Current Account (in % of GDP) 11.06.67.5e4.21.7

Source: IMF - World Economic Outlook Database , Last Available Data

Note: (e) Estimated Data

Main Sectors of Industry

Agriculture has contributed to 10.6% of the GDP in 2013, employing 16.8% of the active population. Only 10% of the land is arable and primitive farming methods are still used. The main crops are pistachios (world largest producer), wheat, rice, oranges, tea, and cotton. Illicit cultivation of the opium poppy is fairly common. Iran is rich in mineral resources, mainly: oil (4th largest producer in the world), and gas (2nd place in reserves in the world), copper, lead, zinc, etc.

Oil production represents over 10% of the GDP. Industrial and mining sectors contribute 37.8% to the GDP. The textile industry is the second most important after the oil sector. Other major industries are sugar refining, food-processing, petro-chemicals, cement, and construction. Traditional handicrafts such as carpet weaving and the manufacture of ceramics, silk, and jewelry are also important to the economy.

The services sector contributes to 44.5% of the GDP.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 21.2 32.2 46.5
Value Added (in % of GDP) 10.2 44.5 45.3
Value Added (Annual % Change) 6.2 7.9 6.4

Source: World Bank - Last Available Data.

 
 
 
Monetary Indicators 20092010201120122013
Iran Rial (IRR) - Average Annual Exchange Rate For 1 USD 9,864.3010,254.1810,616.3112,175.5518,414.45

Source: World Bank - Last Available Data.

 
 

Learn more about Market Analyses about Iran on Globaltrade.net, the Directory for International Trade Service Providers.

Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labor freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
40.3/100
Position:
Repressed
World Rank:
173/178
Regional Rank:
15/15

Distribution of Economic freedom in the world
Source: 2014 Index of Economic freedom, Heritage Foundation

 

Business environment ranking

Definition:

The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

Score:
3.95
World Rank:
81/82

Source: The Economist - Business Environment Rankings 2014-2018

 

Country Risk

See the country risk analysis provided by Coface.

 

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Foreign Trade in Figures

Iran is a member of the Organization of Petroleum Exporting Countries (OPEC), its second producer and the fifth producer in the world. The share of foreign trade (exports + imports) in the country's GDP is nearly 50%, with oil accounting for 60% of its revenues and 80% of its cash entries in 2013. But sanctions in place in 2013 prevented currency entry and also import-export from the private sector. Oil revenues were divided by two. the removal of these sanctions following the Geneva agreement in November 2013 was partial but should ease the economic tensions in the country.

The top three export partners of Iran in 2013 were: China, the UAE, Turkey and the European Union. Besides oil, Iran mainly exports pistachio nuts, carpets, petro-chemical products, organic chemicals, aluminum, and plastic materials.

Its top three import partners are: China, Germany and the UAE (which act as a re-export centers). The main goods imported are: machinery, iron & steel, electric & electronic equipment and cereals.

The Iranian population is young and foreign consumption goods are in high demand, which could offer a dynamic market for imports into the country.  It is important to mention that a large part of these foreign products are smuggled into the country through Dubai.

 
Foreign Trade Indicators 20092010201120122013
Imports of Goods (million USD) 50,46965,40461,76057,09249,000
Exports of Goods (million USD) 78,830101,316130,500104,00082,000
Imports of Services (million USD) 17,38018,15316,3476,512-
Exports of Services (million USD) 7,4708,6578,3966,512-

Source: WTO - World Trade Organization ; World Bank , Last Available Data

 

Main Partner Countries

Main Customers
(% of Exports)
2011
China 4.1%
Iraq 3.6%
United Arab Emirates 3.3%
India 2.0%
Afghanistan 1.4%
See More Countries 85.7%
Main Suppliers
(% of Imports)
2011
United Arab Emirates 26.6%
China 10.3%
South Korea 6.6%
Germany 5.7%
Turkey 4.5%
See More Countries 46.2%

Source: Comtrade, Last Available Data

 
 

Main Products

- bn USD of products exported in 2011
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals, crude 64.6%
Petroleum gas and other gaseous hydrocarbonsPetroleum gas and other gaseous hydrocarbons 4.2%
Polymers of ethylene, in primary formsPolymers of ethylene, in primary forms 1.6%
Acyclic alcohols and their halogenated,...Acyclic alcohols and their halogenated, sulphonated, nitrated or nitrosated derivatives 1.3%
Cyclic hydrocarbonsCyclic hydrocarbons 0.9%
See More Products 27.4%
- bn USD of products imported in 2011
Iron and non-alloy steel in ingots or other...Iron and non-alloy steel in ingots or other primary forms (excl. remelting scrap ingots, products obtained by continuous casting and iron of heading 7203) 4.2%
Flat-rolled products of iron or non-alloy steel,...Flat-rolled products of iron or non-alloy steel, of a width >= 600 mm, hot-rolled, not clad, plated or coated 2.4%
Maize or cornMaize or corn 1.9%
Medicaments consisting of mixed or unmixed...Medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses incl. those in the form of transdermal administration or in forms or packings for retail sale (excl. goods of heading 3002, 3005 or 3006) 1.6%
Automatic data processing machines and units...Automatic data processing machines and units thereof; magnetic or optical readers, machines for transcribing data onto data media in coded form and machines for processing such data, n.e.s. 1.5%
See More Products 88.4%

Source: Comtrade, Last Available Data

 
See More Products
More imports (Intracen Data)
More exports (Intracen Data)
 
 

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Sources of General Economic Information

Ministries
Central bank (markazi)
Ministry of Finance and Economic Affairs
Statistical Office
Statistics Center of Iran
Central Bank
Central Bank of Iran
Stock Exchange
Teheran Stock Exchange
Search Engines
Google Iran
Iran Internet Pages
Economic Portals
Pars Times

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Political Outline

Executive Power
The chief of state is the Supreme Leader of the Islamic Revolution appointed for life time by the Assembly of Experts. The Supreme Leader is Commander-in-Chief of the armed forces, controls the military intelligence and security operations, and has sole power to declare war. The head of the government is the President who is elected by popular vote for a four year term. The Council of Ministers (cabinet) is selected by the President with legislative approval. The President enjoys executive powers, except for matters directly related to the Supreme Leader.
Legislative Power
The legislature is unicameral. The parliament consists of Islamic Consultative Assembly having 290 seats with its members elected by popular vote to serve four-year terms. The Parliament must get the laws validated by the Guardian Council which checks if the laws suggested do not go against Islamic principles. The Parliament has real powers in Iran. It can in particular decide dismissal of a minister. The President cannot dissolve the parliament directly but can recommend the same to Supreme Leader.
Main Political Parties
Political pressure groups conduct most of Iran's political activities. It is quite difficult to get a clear view on Iranian political parties; however the major Political Parties are as follows:
- Islamic Society of Engineers - supports acquiring scientific & technical knowledge by Iran, opposes Western culture & values, supports Islamic values;
- Executives of Construction Party - supporters of ex-President Rafsanjani and his policies;
- Islamic Iran Participation Front - a reformist political party, supports democracy;
- Militant Clergy Association - moderate conservative clerical party.
Current Political Leaders
Supreme Leader: Ayatollah Ali Hoseini-KHAMENEI (since June 1989) - non-partisan
President: Hasan Fereidun RUHANI (since 3 August 2013) - Combatant Clergy Association
Next Election Dates
Islamic Consultative Assembly: 2016
Presidential election: June 2013
 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures the violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire sent to partner organizations,150 RWB correspondents, journalists, researchers, jurists and activists of human rights, including the main criteria - 44 in total - to assess the situation of press freedom in a given country. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
173/180
Evolution:
1 place up compared to 2013

Source: Worldwide Press Freedom Index 2014, Reporters Without Borders

 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Not Free
Political Freedom:
6/7

Map of freedom 2014
Source: Freedom House

 

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Last Updates: October 2014