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Iran's economy- mismanagement or Fortune's fool?

30 November 2013 [09:15] - TODAY.AZ

Romeo, the famed lover in William Shakespeare's masterpiece play refers specifically to his lack of good fortune in being forced to kill Juliet's cousin, saying "I'm Fortune's fool".

This is Romeo's judgement, others have their own judgements.

Coming to Iran's economy with poor performance, this is a disaster that everyone sees, yet people offer various versions of why it happened - we are talking about Iran's disastrous situation with economy.

Nothing matters why and how. Whether sanctions affected Iran's economy more, or mismanagement.

This is the tale of that girl who was narrating to her boyfriend -in the film of Sympathy for Mr. Vengeance, directed by Chan-wook Park- about one who had imagined being two heads on her body and one day shot her head. Reaching to this fragment, the boy asked exited with a special sorrow: Which head? Right or left?

No matter really, the result is known.

The current statistics indicate that Iran economy shrunk by about 6 percent, alongside inflation is at more than 35 percent in Iranian year, ended on 21 March 2013 compared to the previous year.

Former Iranian president Mahmoud Ahmadinejad, thanks to the above $600 billion oil exports (about a half of the country's total oil incomes during last 104 years) and $175 billion worth non-oil export in his 8-year presidency, started extreme economic reforms nicknamed as the "economic surgery," such as removing subsidies and paying cash money to citizens in compensation, giving above $20 billion low-interest loans for jobless people, building cheap houses for the poor, ignoring sanctions and recognizing them as a tool for self-sufficiency.

Indeed, he did surgery, but without injecting any anesthetic drug into the patient's veins. Extreme reform plans were carried out, while Iran's economy was unstable- with a low GDP growth and high inflation rate.

Ahmadinejad, had denied the effectiveness of Western sanctions from on the onset until early 2013, but he began to highlight the sanctions destructive role during his speeches in his late presidency term.

Iran's oil exports, which shared 20 percent of Iran's GDP until 2011, dropped from 2.2 million barrels per day to about one million barrels in the current the year, but his critics have their own judgment about the current situation. Many accuse him of mismanagement.

Current situation

A day after Iranian President Hassan Rouhani explained economic realities the Central Bank of Iran (CBI) released a new report on Nov. 27, saying Iran's GDP shrunk by 5.8 percent during last solar year.

Rouhani released a report on the first 100 days of his administration in a live TV interview on Nov. 26, charging his predecessor Ahmadinejad on mismanagement and non-efficiency.

When Rouhani took office in August, the country's inflation rate was around 43 percent, while the government's debts to various sectors were over two trillion rials (about $80 billion based on current official USD rate; 24,829 rials).

This is the general resume of the situation, but with detailed review over that published by CBI, the situation seems even much worse than what Rouhani enumerated.

Economic performance based on CBI's report for last solar year (USD rate is calculated based on 12,260 rials for each dollar for this year):


GDP

(Billion rials)

Oil-less GDP

(billion rials)

Value-added in various sectors*

Oil

Agriculture

Industries and mines

Construction

Services

The figures were calculated compared to the base year prices of Iranian colander year 1376 (1997)

Iranian year ,ended on 21 March 2012

(Billion rials)

555436

506935

48501

74265

154121

28385

288.21

Iranian year, ended on 21 March 2013

(Billion rials)

522957

490995

31962

78943

135008

20414

286951

Changes y-to-y percent

- 5.8

-3.1

-34.1

6.3

-12.4

-28.1

-0.4

* The values are calculated based on "base year" prices of 1376 (1997) to eliminate the role of some temporary factors such as currency rate fluctuations, inflation, etc. in the performances.

Mismanagement or sanctions?

The figures mentioned above are just a scene of Iran's economic tragedy. Decreasing the amount of investment in the industry sector by 29 percent, declining industrial production index by 9 percent, dropping petrochemical products and condensate exports by 33 percent and 12 percent respectively during last solar year compared to the previous year, alongside other even worse facts indicates that Ahmadinejad's legacy for Rouhani is just a huge amount of problems.

Rouhani began his mandate by attempting to normalize Iran's relations with Western countries. Some restrictive measures imposed on Iran are going to be eased.

Whether caused by sanctions or mismanagement, the country's economy should revive as soon as possible to prevent it from falling into even greater disasters. Nothing else matters.

* Fortune refers to goddess of luck in Roman religion (Fortuna). Fool means marionette.


Dalga Khatinoglu    /Trend/


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