Iran Economy

There are many things to know about Iran and the Iranian economy is only one of them. The economy of Iran is situated on the 18th place in the world economy judged by the purchasing power parity. The Iran economy is a mixture of central planning, state ownership of oil and other large enterprises as well as village agriculture and small-scale private trading. The economic infrastructure has been improving significantly over the last two decades but economic specialists claim that there is still room for improvement, especially in what concerns inflation and unemployment. It is estimated that the service sector contributes to the largest percentage of the GDP, while industry and agriculture follow closely. In 2006, nearly half of the government budget came from oil and natural gas revenue and a third from taxes and fees. In the interval 2000-2004 the government spending contributed to about 14% increase in the annual inflation rate. When it comes to employment, it is estimated that nearly 2% of the national employment is generated in tourism, and which is envisaged to increase to 10% in the following years. Iran ranks 89th in tourist income although it is rated among the 10 most touristic countries in the world mostly thanks to its rich history. Iran has benefited from the strength of the oil market ever since 1996 and it has helped the government come up with a timely debt payment scheme. At the same time, from a desire to diversify the oil-reliant economy, several other industries have been developed along the time some of which are biotechnology, nanotechnology and pharmaceuticals.

Specialists claim that one of the ‘chronic diseases’ of the Iranian economy has been the Iranian budget deficit. The Iran economy is known to suffer from large budget deficits as a result of large-scale state subsidies. The government has tried to remedy part of the Iran economy subsidies problem by replacing them with targeted social assistance and increase the productivity while moving towards free market prices.

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