Iranian Gov't Shifting Focus to Housing Sector

President Hassan Rouhani’s administration is focused on revitalizing the beleaguered housing sector and its intermediate sectors to get them out of their years-long recession, the minister of economic affairs and finance announced.

“Various economic sectors, except the housing sector, have registered a positive growth rate and it is the policy of the government to create a boom in the sector, especially subsectors related to building materials and intermediate goods and move to foster exports in this sector,” Ali Tayyebnia was also quoted as saying by Shada, the official news service of the Economy Ministry.

An analysis by the research arm of the Iranian Parliament in late January revealed that the negative growth in the property market will persist all the way to the end of the current fiscal year in March 2018.

“A look at statistics released by the Central Bank of Iran and the Statistical Center of Iran shows that the housing sector slipped into recession from March 20, 2012, and experienced negative growth rates ever since,” read the report by Majlis Research Center.

It added that this recession has persisted through 2015-16 and predictions show it will continue until the end of the year to March 20, 2018, implying that the housing sector’s slump has turned into a five-year downturn.

Speaking at a meeting on Resistance Economy in Markazi Province on Thursday, Tayyebnia said reducing the budget’s dependency on oil is a major component of guidelines set by the Leader Ayatollah Seyyed Ali Khamenei, based on which the government undertook measures that led to a non-oil trade surplus in the past two years.

Noting that there was a time when the share of oil in annual budgets was more than 80%, he said that last year, from a total of 2.8 quadrillion rials ($74.6 billion) of the budget expenses, about 1.13 quadrillion rials ($30.13 billion) were generated through tax revenues.

Tayyebnia referred to the previous fiscal year as “exemplary” in that the inflation rate was lowered to single digits for the first time after more than two decades and an 11% economic growth was registered, “although it is obvious that a portion of this growth occurred on the back of higher oil production”.

 Oil Story

The minister blamed the previous administration of Mahmoud Ahmadinejad for increasing the country’s dependence on the oil sector in the face of ramped up economic sanctions instead of striving to promote economic resilience.

Tayyebnia implied that the fact that the government and the country were so deeply relying on oil revenues, was one of the factors prompting foreign powers to impose “the harshest sanctions in history on Iran” and they did this knowing how it could play havoc on the economy.

“Sometimes our historical memory is poor,” he said, stressing that it must be assessed how “that historic consensus formed against our country” and what actions directed even the Iranian allies not to protest sanctions against the country.

On July 14, 2015, the P5+1 (China, France, Russia, the United Kingdom and the United States, plus Germany), the European Union and Iran agreed to a Joint Comprehensive Plan of Action that was implemented on January 16, 2016, effectively beginning the process of sanctions’ removal.

Tayyebnia ended on a more positive note by saying that macroeconomic factors are in a good shape.

“Iran has improved its international ranking in ease of doing business by 32 points while bettering its other indicators, namely transparency, innovation,  job creation and development,” he said.