Controlling inflation in Iran impossible under sanctions-expert

Business Materials 19 November 2013 21:08 (UTC +04:00)

Baku, Azerbaijan, Nov. 19

By Umid Niayesh - Trend:

Controlling inflation in Iran under international economic sanctions is impossible, head of the Iran World Trade Center, Mohammad Reza Sabzalipour told Trend news agency via email.

On November 3, the Central Bank of Iran announced that the country's inflation rate for the 12-month period ending in the seventh Iranian calendar month of Mehr (October 22), hit 40.4 percent.

According to the International Monetary Fund`s (IMF's) last Regional Economic Outlook covering the Middle East and Central Asia which was released on November 12, Iran's consumer price inflation will hit 42.3 percent in current fiscal year(started on March 21), predicting that the figure will be 29 percent in the next fiscal year.

The figure was 30.5 percent in the last Iranian fiscal year.

Sabzalipour went on to note that, under the sanctions, the Iranian administration would not be able to control inflation during a short-time period.

"Iran's economy suffers stagnation as well as increasing unemployment rate," he said, adding that president Hassan Rouhani`s administration should try to get sanctions removed as a first step in resolving the country's economic problems.

Stagflation is a term used in economics to describe a situation where inflation is high, economic growth rate slows down, and unemployment remains high.

Based on the latest reports, the unilateral sanction of the United States and the EU have dropped Iran's oil exports from 2.2 million barrels to one million barrels per day. The sanctions have forced China, India, and Japan to decrease their oil imports from Iran.

The same falling trend applies to the country's gas condensates and oil products exports.

It is while even if Western countries decide to lift sanctions, the process would occur over a long period.

Earlier, Sabzalipour commented that the process of lifting sanctions imposed on Iran depends on their degrees and may take several years, adding that "the process may start one month after the warming of relations between Iran and the US and take several years. It's not predictable at all."

The United States and the European Union want Iran to comply with the UN Security Council's resolutions and stop enriching uranium. Israel and some Western countries have repeatedly accused Iran of pursuing non-civilian goals through its nuclear energy program. Iran has categorically rejected the allegation, stressing that it is developing nuclear technology for peaceful purposes and electricity production.

Sabzalipour also criticized the head of Rouhani's office, Mohammad Nahavandian due to his claims about controlling inflation, saying that inflation can be controlled by production increases and economic growth which which have not been seen under Rouhani so far.

On Nov. 17, Mehr News agency quoted Nahavandian while addressing the meeting of representatives of Iran's Chamber of Commerce, Industry and Mines saying that the administration's policies on controlling inflation have led to successful results.

Sabzalipour called these comments populist and incorrect, adding that the administration should pursue policies which lead to continuous economic growth, even in low rate.

Statistical Center of Iran recently reported that the average economic growth during ex-president Mahmoud Ahmadinejad's 8-year administration (2005-2013) stood below 3.5 percent, while last year's growth alone stood at negative 5.4 percent and this year's figure is predicted to be around negative 1.6 percent.

The IMF predicted in its last report that Iran's real GDP growth rate will shrink by 1.5 percent in the current fiscal year (which started on March 21), but it will rise to 1.3 percent in next fiscal year.
According to the report, the country's real GDP growth decreased by 1.9 percent in the last fiscal year (ended on March 21).

The Statistical Center of Iran reported that the country's unemployment rate hit 10.4 percent in summer, a 0.2 percent decline compared to spring.

Iran's unemployment rate stood at 12.2 percent in the previous calendar year.