2. Iran is an Islamic republic on the Persian Gulf with historical sites dating to the Persian
Empire. Extensive marble ruins mark Persepolis, the empire’s capital founded by Darius I in
the 6th century B.C.
It is a founding member of the UN, ECO, NAM, OIC, and OPEC. Its political system is
based on the 1979 Constitution which combines elements of a parliamentary democracy with
a theocracy governed by Islamic jurists under the concept of a Supreme Leadership. A
multicultural country comprising numerous ethnic and linguistic groups, most inhabitants are
officially Shia, and Persian is the official language.
It is the second largest economy in the Middle East and North Africa (MENA) region after
Saudi Arabia, with an estimated Gross Domestic Product (GDP) in 2014 of US$406.3 billion.
It also has the second largest population of the region after Egypt, with an estimated 78.5
million people in 2014. Iran’s economy is characterized by a large hydrocarbon sector, small
scale agriculture and services sectors, and a noticeable state presence in manufacturing and
financial services. Iran ranks second in the world in natural gas reserves and fourth in proven
crude oil reserves. Economic activity and government revenues still depend to a large extent
on oil revenues and therefore remain volatile.
Iran had one of the Middle East’s most advanced economies before the 1979 Islamic
revolution. Today, the economy is in shambles thanks to an agenda characterized by large
subsidies to favored sectors, a bloated public sector, and high inflation. Corruption is another
serious problem. Economic sanctions imposed by the U.S. and European Union in response
to Iran’s illicit nuclear weapons program have had devastating effects. Petroleum exports,
which provide about 85 percent of government revenues, declined drastically in 2011.
President Hassan Rowhani, elected in June 2013, had found it difficult to revive the economy
without the removal of Western sanctions by negotiating a deal to curb Iran’s nuclear
program. Things have now started looking better for the country post the lifting of the trade
ban by the United States of America and other associated nations.
3. The economy of Iran is a mixed and transition economy with a large public sector. About
60% of the economy is centrally planned. It is dominated by oil and gas production, although
over 40 industries are directly involved in the Tehran Stock Exchange. With 10% of the
world's proven oil reserves and 15% of its gas reserves, Iran is considered as an "energy
superpower".
It is the world's 18th
largest by purchasing power parity (PPP) and twenty-nine by nominal
gross domestic product. The country is a member of Next Eleven because of its high
development potential. A unique feature of Iran's economy is the presence of large religious
foundations called Bonyad, whose combined budgets represent more than 30% of central
government spending.
Price controls and subsidies, particularly on food and energy, burden the economy.
Contraband, administrative controls, widespread corruption, and other restrictive factors
undermine private sector-led growth. The legislature in late 2009 passed the subsidy reform
plan. This is the most extensive economic reform since the government implemented gasoline
rationing in 2007.
Most of the country's exports are oil and gas, accounting for a majority of government
revenue in 2010. Oil export revenues enabled Iran to amass well over $100 billion in foreign
exchange reserves as of 2010.
Due to its relative isolation from global financial markets, Iran was initially able to avoid
recession in the aftermath of the 2008 global financial crisis. Yet, following increasingly
stringent sanctions imposed by the international community as a result of the country's
nuclear program, oil exports fell by half, allowing Iraqi oil exports to overtake Iran's for the
first time since the 1980s. In September 2012, the Iranian Rial fell to a record low of 23,900
to the US dollar.
Exports aided self-sufficiency and domestic investment, although double-digit unemployment
and inflation remain problematic. Iran's educated population, high human development,
constrained economy and insufficient foreign and domestic investment prompted an
increasing number of Iranians to seek overseas employment.
Population: 77.1 million
GDP (PPP): $945.5 billion –1.7% growth in 2013 5-year compound annual growth 1.0%
$12,264 per capita
Unemployment: 13.2%
Inflation (CPI): 35.2%
FDI Inflow: $3.0 billion
Public Debt: 10.6% of GDP
4. After the Iranian Revolution in 1979, the United States ended its economic and diplomatic
ties with Iran, banned Iranian oil imports and froze approximately $11 billion of its assets. In
1996, the U.S. Government passed the Iran and Libya Sanctions Act (ILSA) which prohibits
U.S. (and non-U.S.) companies from investing and trading with Iran in amounts of more than
$20 million annually. Since 2000, exceptions to this restriction have been made for items
including pharmaceuticals and medical equipment.
Iran's nuclear program has been the subject of contention with the West since 2006 over
suspicions of its intentions. The UN Security Council imposed sanctions against select
companies linked to the nuclear program, thus furthering the country's economic isolation.
Sanctions notably bar nuclear, missile and many military exports to Iran and target
investments in oil, gas and petrochemicals, exports of refined petroleum products, as well as
the Iranian Revolutionary Guard Corps, banks, insurance, financial transactions and shipping.
In 2012, the European Union tightened its own sanctions by joining the three decade-old US
oil embargo against Iran. In 2015, Iran and the world powers reached a deal on Iran's nuclear
program that will remove the main sanctions against Iran by early 2016.
Iran may be losing as much as $60 billion annually in energy investment. Sanctions are
making imports 24% more costly on average. In addition, the latest round of sanctions could
cost Iran annually $50 billion in lost oil revenues. Iran is increasingly using barter trade
because its access to the international dollar payment system has been denied.
5. The Gross Domestic Product (GDP) in Iran was worth 415.34 billion US dollars in 2014. The
GDP value of Iran represents 0.67% of the world economy. GDP in Iran averaged 148.91
USD Billion from 1965 until 2014, reaching an all-time high of 576.56 USD Billion in 2011
and a record low of 6.15 USD Billion in 1965. GDP in Iran is reported by the World Bank.
The biggest sector of Iran´s economy is services, which account for 51% of GDP. With
services the most important segments are: real estate and specialized and professional
services (14% of total GDP); trade restaurants and hotels (12%) and public services (10%).
Oil production constitutes 23% of the wealth. Manufacturing and mining contribute for 13%
of the output and agriculture for 10%. The last big component of the GDP is construction and
electricity, gas and water distribution, which account for 7% of total output.
7. Throughout the 1960s and 1970s, Iran had a favourable trade balance, but substantial imports
of services resulted in an annual deficit on current accounts. By 1974, with a net trade surplus
of $17,718 million and a current accounts surplus of $10,893 million, Iran was one of the
world's major exporters of capital. The current accounts balance remained in surplus annually
until the massive economic and civic turbulence caused by the revolution of 1979 and the
long, devastating war with Iraq (1980–88). By the time the war had ended, Iran's position as a
net foreign creditor was badly eroded due to a substantial drop in the world price for oil and a
sharp increase in dependence on imports—largely machinery and basic commodities to
rebuild infrastructure. By 1993, Iran owed foreign creditors nearly $30 billion. In following
years, the government, still plagued by lessening oil revenues and a quota of production
imposed on it by OPEC, was forced to reschedule the debt—with payments coming due in
1996, when foreign debt went down to approximately $22 billion. Foreign debt stood at
approximately $8.2 billion in 2002.
The International Monetary Fund (IMF) reports that in 2000 Iran had exports of goods
totalling $28.4 billion and imports totalling $15.2 billion. The services credit totalled $1.4
billion and debit $2.3 billion. The following table summarizes Iran's balance of payments as
reported by the IMF for 2000 in millions of US dollars.
The last Interim Assistance Strategy which covered the period 2002-2003 was extended
through 2005 by the World Bank. No new World Bank loans to Iran have been approved
since 2005 and all projects have closed. The International Finance Corporation (IFC) has no
program in Iran at present. Multilateral Investment Guarantee Agency (MIGA) issued two
guarantees in 2005 and no guarantees have been provided since then.
8.
9. The distribution gives the percentage contribution of agriculture, industry, and services to
total GDP, and will total 100% of GDP if the data is complete. Agriculture includes farming,
fishing, and forestry. Industry includes mining, manufacturing, energy production, and
construction. Services cover government activities, communications, transportation, finance,
and all other private economic activities that do not produce material goods.
The service sector accounts for the majority of the GDP of Iran with more than half the
amount contributed by this sector. It is followed by oil exports and consequently followed by
agriculture and the manufacturing sector.
10. The inflation rate in Iran was recorded at 10.80% in October of 2015. Inflation Rate in Iran
averaged 14.09% from 1957 until 2015, reaching an all-time high of 59.02% in May of 1995
and a record low of -3.27% in April of 1958. Inflation Rate in Iran is reported by the Central
Bank of Iran. In Iran, the most important categories in the consumer price index are Housing,
water, electricity, gas and other fuels (29% of total weight) and Food and beverages (28.5%
of total weight). Others include: Transport (11.97%); Furnishings, household equipment and
routine household maintenance (6%); Clothing and footwear (6%) and Health (5.5%). The
smallest groups are Recreation and culture; Education; Restaurants and hotels;
Communication; Tobacco at and Miscellaneous services and goods.
For the year 2015,
Iran Prices Last Previous Highest Lowest
Inflation Rate 10.80 11.17 59.02 -3.27
Consumer Price Index CPI 228.70 227.00 228.70 2.30
Producer Prices 216.00 216.00 216.10 56.27
Food Inflation 6.40 7.10 57.90 4.20
11. Iran’s Human Development Index (HDI) value for 2014 is 0.766— which puts the country
in the high human development category—positioning it at 69 out of 188 countries and
territories. Between 1990 and 2014, Iran’s HDI value increased from 0.567 to 0.766, an
increase of 35.0 percent or an average annual increase of about 1.26 percent. The rank is
shared with Costa Rica.
Between 1980 and 2014, Iran’s life expectancy at birth increased by 21.3 years, mean years
of schooling increased by 5.9 years and expected years of schooling increased by 5.9 years.
Iran’s GNI per capita increased by about 52.9% between 1980 and 2014.
Iran’s 2014 HDI of 0.766 is above the average of 0.744 for countries in the high human
development group and above the average of 0.607 for countries in South Asia. From South
Asia, countries which are close to Iran in 2014 HDI rank and to some extent in population are
Bangladesh and Pakistan, which have HDIs, ranked 142 and 147 respectively.
The Gender Development Index (GDI) measures gender inequalities in achievement in
three basic dimensions of human development: health (measured by female and male life
expectancy at birth), education (measured by female and male expected years of schooling
for children and mean years for adults aged 25 years and older); and command over
economic resources (measured by female and male estimated GNI per capita). The GDI is
calculated for 161 countries. The 2014 female HDI value for Iran (Islamic Republic of) is
0.689 in contrast with 0.804 for males, resulting in a GDI value of 0.858. In comparison, GDI
values for Bangladesh and Pakistan are 0.917 and 0.726 respectively.
The Gender Inequality Index (GII) reflects gender-based inequalities in three dimensions –
reproductive health, empowerment and economic activity. The GII can be interpreted as the
loss in human development due to inequality between female and male achievements in the
three GII dimensions. Iran has a GII value of 0.515, ranking it 114 out of 155 countries in the
2014 index. In Iran, 3.1 percent of parliamentary seats are held by women, and 62.2 percent
of adult women have reached at least a secondary level of education compared to 67.6
percent of their male counterparts. For every 100,000 live births, 23 women die from
pregnancy related causes; and the adolescent birth rate is 31.6 births per 1,000 women of ages
15-19. Female participation in the labour market is 16.6 percent compared to 73.6 for men.
Multidimensional Poverty Index (MPI) identifies multiple deprivations in the same
households in education, health and living standards. Due to a lack of relevant data, the MPI
has not been calculated for this country.
12. According its estimates, in 2011, access to an improved source of water supply was 98% in
urban areas where more than two thirds of Iranians live. It was 90% in rural areas (87% house
connections). Access to sewerage in urban areas was estimated at 19% in the late 1990s.
Access to improved sanitation was estimated at close to 100%.
Iran is a presumed source, transit, and destination country for men, women, and children
subjected to sex trafficking and forced labour. Iranian and Afghan boys and girls are forced
into prostitution domestically; Iranian women are subjected to sex trafficking in Iran,
Pakistan, the Persian Gulf, and Europe. Iran does not comply with the minimum standards for
the elimination of trafficking, and is not making significant efforts to do so; the government
does not share information on its anti-trafficking efforts, making it difficult to assess the
country's human trafficking problem or the government's attempts to curb it.
Despite substantial interdiction efforts and considerable control measures along the border
with Afghanistan, Iran remains one of the primary transhipment routes for Southwest Asian
heroin to Europe; suffers one of the highest opiate addiction rates in the world, and has an
increasing problem with synthetic drugs; lacks anti-money laundering laws; has reached out
to neighbouring countries to share counter-drug intelligence.
13. UNDP’s 2012-2016 country programme was prepared in close consultation with the
Government of the Islamic Republic of Iran, drawing from the Fifth National Development
Plan, the agreed outcome areas of the United Nations Development Assistance Framework
(UNDAF) 2012-2016, and key priorities of the UNDP Strategic plan. The country
programme is organized around four main issue-areas: poverty reduction, environmentally
sustainable management, health in terms of support to Global Fund grant implementation and
natural disaster management. The cross-cutting issues of south-south cooperation and sharing
of knowledge and expertise through science and technology transfer are included across all
programme components. As a middle income country, Iran is well placed to play a leading
role in exchanging knowledge and technical expertise through South-South cooperation, both
in the region and globally. UNDP will continue to support Iran in these endeavours, drawing
on its vast global knowledge network and established best practices.
14. The Indianstate that correspondstothe economyof Iran wouldbe Jammu and Kashmir. Even
thoughthe HDI of J&K is0.644 as comparedto 0.766 of Iran, buton a comparative scale,bothcan be
rankedwell above the respective average.
Both J&K (0.29) andIran (0.34) have similarGini coefficientsclose to 0.3 whichiswell below
average. Bothregionshave a fairliteracyrate of about 65%.
Both regionsare majorexportersof commodities;Iranbeingamajoroil exporterandJ&Kbeing
majorexporterof mineralsandspices.
There isconstant unrestinboththe regionsdue to heavypolitical tension.
Trade restrictionsare prevalentinboththe regionswhichare constantlyhamperinggrowthinboth
these regions.
Both the regionswere erstwhilefamoustouristdestinations,buttourismhastakenahit due to the
political unrestprevalentinthese regions.
The formationof newgovernmentandthe upliftmentof trade sanctionsandbetterpolicieshave
usheredina neweraof growthand cooperationinthese regions.
