Iran

Capital: Tehran

Local time:
It is %T:%M %A in Teheran

GDP growth rate: 3.8% in 2013

FDI stock: 27 600 million USD in 2010

Economic trends

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 2011 represented almost 27% of the GDP, 90% of exports and 60% 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 is estimated at nearly 15% of the active population in 2011 (30% among the youth). The other major problem in the country is inflation which increases the prices of consuming goods, and this creates social problems and fears of public riots.

Growth (2.5% in 2011) should not exceed 2.2% in 2012, a figure lower than the regional average and insufficient to compensate the very high inflation (reaching 16.5% in 2012).

After the victory of the ultraconservatives in the legislative elections of 2012, internal tensions at the heart of the ruling powers have become apparent and there is a risk that they will further worsen the country's economic situation. Galloping inflation and rising unemployment lead the country's workforce, especially the young, to leave Iran.

Main branches of industry

Agriculture contributes nearly 11% to the GDP but employs one-third 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 10% of the GDP. Industrial and mining sectors contribute nearly 26% 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 nearly half of the GDP.

International trade

Iran is a member of the Organization of Petroleum Exporting Countries (OPEC). The share of foreign trade (exports + imports) in the country's GDP is nearly 50%, with oil accounting for 80% of the exports income.

The top three export partners of Iran are: China, Japan 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 acts as a centre for reexport). 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.