A study of three macroeconomic indicators, namely inflation, economic growth rate and unemployment over the past 11 months since the beginning of the current Iranian year (to end March 20) indicates that while the economy has improved compared with the previous year in terms of inflation and economic growth, unemployment rate remains more or less unchanged.
According to a report by Eghtesadnews, the inflation rate reduced from 30.2% in the first month of the current Iranian year (March 21- April 20) to 15.2% in the 11th month (January 21- February 19). Meanwhile, the economic growth rate (excluding oil) increased from -1.1 to 3.5 compared with the previous year.
This is while the unemployment rate experienced a swing during the first nine months of the year, dropping from 10.7% in the first quarter to 9.5% during the second quarter and increasing once again to 10.5% during the third quarter.
While the three indicators suggest a relative improvement in the status of the economy compared with the previous year, the overall economy is still far from recovered as the achieved economic growth has not managed to pull the industries out of recession or significantly influence the unemployment data. The reduced inflation rate also failed to improve people’s purchasing power.
Inflation Down to 15%
According to reports by the Central Bank of Iran (CBI) and the Statistical Center of Iran (SCI), the inflation rate reached 15.2% in the 11th month of the current year, surpassing the government’s promise to bring down inflation to 20%. Meanwhile, authorities announced that point-to-point inflation rate (the percentage change in the Customer Price Index) reduced to zero in the 11th month of the year from its 17.6% at the beginning of the year.
While the reduction in point-to-point inflation rate is regarded by the government as an achievement, many economic experts do not consider it a suitable tool for estimating the inflation rate. Moreover, some experts are skeptical of the government’s claim, pointing that zero inflation rate is a bit difficult to digest.
Positive Economic Growth Rate
Reports put growth rate at 3.5% (excluding oil) and 4% (including oil) during the first six months of the year. This is while the figures stood at -1.1% and -1.9% during a similar period in the previous year. While the figures are still far from the 8% growth anticipated in the Fifth-Five Year Economic Development Plan, the government’s achievement in lifting the economy from its previous (2011-2016) negative territory to 4% positive growth is still a significant achievement – something the authorities have stressed time and again.
But the upbeat news about positive economic growth has also been criticized by some economists, who argue that the presumably growing economy has failed to improve the country’s overall economic conditions and employment data. A study of the economic growth in different sectors reveals that the positive growth during the first half of the year was mainly due to the growth in the oil and construction sectors.
Unemployment Stable
Unemployment rate experienced an oscillating trend during the first 9 months of the year. While joblessness in the first quarter was 10.7%, it dropped to 9.7% during the second quarter, to climb up again to 10.5% in the third quarter.
Economists believe the reduction in unmployment rate in the second quarter is due to reduced participation rate (active labor force) during the period. According to data published by SCI, as many as 175,220 people joined the work force in the third quarter of the year.
In addition to an increase in the participation rate, the third quarter also experienced a reduction in agricultural activities, leading to further increase in unemployment. While 396,000 new jobs were created in the mining and industries sector, the loss of 486,000 jobs in the agricultural sector had a negative impact on the employment data.
