An Overview of the Economy of the Islamic Republic of Iran

Country Information (March 2010 – March 2011)

  • Population: 75.1 mn
  • GDP Growth: 2.5%
  • Unemployment: 14.55%
  • Inflation: 12.4%
  • Exports of Goods and Services: US $107bn
  • Imports of Goods and Services: US $65 bn

Iran’s economy is a transition economy with a still large public sector and about 48% of the economy centrally planned. It is also a diversified economy with over 40 different industrial sectors listed in the Tehran Stock Exchange.

Iran has one of the world’s largest oil reserves and a large number and valuable cultural heritages and remarkable landscape and diversified environments.

The economy is based primarily on oil revenues, accounting for a large part of its exports however; however, the share of oil revenue dropped by 12% during the period of 2005 to 2010.

The GDP structure of the Islamic Republic of Iran, by sector, is the following:

  1. Agriculture: 10%. Losing ground progressively since 2008. According to the Central Bank of Iran, 730,000 jobs were lost in the agriculture sector during the period between March 2006 and June 2010.

  2. Industry: 17%. The share of industry has been boosted in the last decade thanks to the automotive sector, registering more than 10% growth in the last three years. Mines and metals output and steel output growth more than 8% per year in the past three years.

  3. Construction: this sector came out of the recession in the last two years but has not yet reached the level of the biennium 2007-2008. After two years of negative growth, -14% in 2008 and -43% in the biennium 2009/2010, the sector is expected to growth, in Tehran, by 42%, in 2011.

  4. Services: 49%, services such as banking, trade, real Estate, Etc. drives almost half of the economy.

  5. Oil: GDP share of oil revenue shrieked by 12% from March 2006 to March 2011.

Five-Year Economic Development Plans
Iran’s Five-year development plans, 2011–2015, emphasize a gradual move towards a market-oriented economy and sets guidelines for the socio-economic development of the country. Designed to give power to the people through delegation, the plan is part of “Vision 2025”, a strategy for long-term sustainable growth. According to IMF, Iran is moving toward the right direction to a market economy.

Foreign Trade
Oil earnings represent 80% of export revenue. High oil prices, since 2000, resulted in a large trade surplus, despite a rise in import spending and a sharp increase on foreign exchange rate. However, the Central Bank eased the debt-repayment schedule and relaxed its import control program.

Iran’s non-oil export stood at US $25.6bn in 2010; Iran’s leading export destinations, in 2010, were Iraq, China, United Arab Emirates and India, in that order, according the country’s Trade Promotion Organization. Pistachio, liquefied propane, methyl alcohol (methanol), hand-woven carpets are the core of non-oil exports. Among the top 10 export items, Iran’s technical and engineering services represented 33% of the country’s export in 2010.

On the other hand, the total volume of imports rose by 189% from 2000 to 2005, from US $39.7bn in 2000 to US $55.2bn in 2009. Iran’s major imported items are fuel, steel bars, wheat and rice. Top 10 imported items to Iran represent 25% of the entire import. Leading suppliers are UAE, China, Germany and South Korea. (Source, TPO).