GDP, unemployment, inflation, interest rate, and exchange rate in Iran in the last 10 years

Iran’s economy status: In this article, we will discuss some important economic factors in Iran. These factors include GDP,  unemployment, inflation, interest rate, and the exchange rate that are important factors in any country ant without them nobody could have a real picture of an economy.

GDP of Iran in last 10 years

The Islamic Republic of Iran is a big country in the west of Asia. This country’s economy is a mixed and transition economy which have a large public sector.  According to Purchasing Power Parity (PPP) index, this country’s economy is the eighteenth large economy in the world. The economy of Iran mostly depended on oil and gas production because this country benefits from massive oil and gas reservoirs; 10% of the world’s proven oil reserves and nearly 15% of the world’s gas reserves are deposed in Iran.

Also, this country has one of the best stock exchanges that had a good performance in the last decade, however, this market experienced a sharp decrease in last month (index of this market reached 1185000 unit from 2100000 unit); over 40 industries of Iran involved in the Tehran Stock exchange. Segmentation of Iran’s economy is different from other economies; for example, some religious foundations (like Bonyad and others) have a defined share in the budget of this country.

One of the features of Iran’s economy is price controls and subsidies, especially on food and energy. Also oil and gas are the main revenue sources of Iran which accounting for a majority of the Iranian government. In recent years and after the spreading of COVID-19, the economy of Iran, like other economies, opposed challenges like increased unemployment, high inflation, and also unfair sanctions that had been imposed.

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Let us look at the GDP of Iran in the last 10 years.

Iranian GDP per capita growth in 2010 up to 2020 was as below.  From 2010 up to 2012, this growth was negative, then from 2012 up to 2017 this growth was positive, and in the later period, this growth was negative, again. Iran’s economy status

Figure1: GDP growth of Iran in the  last 10 years

Figure 1: GDP growth of Iran in the  last 10 years

According to the Central Bank of Iran, the GDP in Iran contracted 2.80 percent in the second quarter of 2020 over the same quarter of the previous year. read more about Iran’s GDP

Unemployment in Iran in last 10 years

Unemployment refers to persons who are actively looking for a job but their affairs are unsuccessful. The unemployment rate is one of the most important indexes in the economy because it shows the probability of achieving profitable work by a default labor force to promote the productivity of an economy. This rate is calculated by dividing the number of unemployed persons by the number of all labor forces. read more about Iran’s culture

There is different types of unemployment:

• a) Fictional unemployment (that occurs when people change their jobs voluntary);
• b) structural unemployment (this type of unemployment occurs as a result of technological changes in the structure of the economy);
• c) Institutional unemployment (which occurs in the result of permanent or long term institutional incentives and factors in the economy);
• d) seasonal unemployment (this type of unemployment occurs in the result of seasonal changes and mostly relate to seasonal labors who have not continuum job).

In bellow, you see the condition of unemployment in last ten years. As you can see, on average the rate of unemployment in the last ten years experience a decreasing trend.

Figure 2: Unemployment rate of Iran in last 10 years

Figure 2: Unemployment rate of Iran in last 10 years

Inflation rate in Iran in last 10 years

Inflation means the rise of the average cost of a basket of defined goods or the decrease of purchasing power of a given currency in the defined period. The opposite of inflation is deflation which means the increase of purchasing power of a currency or decrease of the average cost of a selected good in the defined period.

Three main factors could lead to inflation: Demand-pull effect (which occurs as a result of an increase in the money supply from different ways); cost-push effect (an increase of input prices and production chain could result in this inflation) and built-in inflation (this type of inflation occurs in the result of expectations).

Economists use different indexes to calculate inflation rates: Consumer Price Indexes (or CPI, which is calculated by a weighted average of defined goods and services); Producer Price Index (PPI, this index calculate by using average selling prices). The inflation rate in Iran in 10 last years are as below:

Figure 3: Inflation rate of Iran in  the last 10 years

As you can see, Iranians experience a sharp increase in inflation in the last three years that unfair sanctions in different areas are one of the main factors that lead to this condition.

The interest rate in Iran in last 10 years

Iran’s economy status: The simplest definition of interest rate is a percentage of the total amount of your borrow or save that charged. The interest rate has an important impact on the economy, so economists are watchful about the rise, fall, or changeless of this rate.

For a borrower, the interest rate equals the charged amount for borrowing money that defined as a percentage of the subtotal of borrowed money. It is clear that this man borrows money for a buyer in present and must pay more money in the future.

Another concept that is similar to the interest rate is the bank rate. Almost in any country, the official interest rate is defined by the government (through Central Bank). Some areas that influenced this rate include foreign investment, deposits in Banks, investment in different aspects of the economy (industry, buildings, etc.), borrowed loans from banks, and other areas.

In below, we see the interest of Iran in the last ten years; as bellow table shows, the interest rate in Iran experience an increase between 2013 to 2015 then a decrease up to 2017. In the next years, the interest rate of Iran was constant (equal to 18 percent).

Figure 4: The interest rate in Iran in the last 10 years

Figure 4: The interest rate in Iran in the last 10 years

Exchange rate in Iran in last 10 years

Exchange rate is defined as the value of one country’s currency against the currency of another country or an economic zone. For example, the exchange rate of Iranian Rials defined as the value of Rials against USD, Euro, 100 Yen, etc. (Iran’s economy status)

This rate shows the power of any economy and exports and imports of different countries impacted by this rate. According to economic principles, the decrease of one country’s exchange rate could lead to an increase in exports and a decrease in imports and vice versa (the increase of one country’s exchange rate could lead to a decrease of exports and increase of imports).

In the bellow, we show the exchange rate of Iran in the last 10 years (official rate and market rate) against USD. As you can see, the market rate of USD reached 31050 in 2020 which is the most exchange rate in all of the years. The official rate specified with the government and central bank and dedicate to certain goods imports and other uses.

Table 1: official and Market rate of USD in the last 10 years (per 10 Rials)

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