Economic trends
The Iranian economy is largely dominated by the public sector which controls nearly 80% of it. The private sector is therefore relatively limited. The economy is very dependent on the oil income which represents nearly 80% of exports and 60% of its revenues. In this context, an increase or a decrease in oil prices can have a great influence in the state's revenues. In order to diversify its economy and become less dependent of its oil sector, the government has decided to privatize and open to foreign investment most of the sectors of its economy. However, the progress on this issue has been slow. On one side, it still exists a real political resistance to a genuine privatization, while on the other, the current environment (international tensions due to nuclear power, interventionism of the State) creates hesitation among the private and foreign investors in taking risks. Nevertheless, reforms are essential. The public sector does not have resources to create the jobs required to reduce the unemployment rate which is estimated at nearly 15% of the active population (30% among the youth). The other major problem in the country is inflation which increases the prices of consuming goods, and this creates social problems and fears of public riots.
Iran was isolated from the international scene due to the United States' embargo. The country was not affected directly by the financial crisis of 2008-2009. It has, however, undergone through a reduction in oil prices which has caused a contraction of the country's income. In 2009, The Islamic Republic of Iran has also been affected by the greatest political crisis since the accession to the revolution in 1979 because of the general protest linked to the re-election of president Ahmadinejad, which provoked a flood of demonstrations followed by a strong repression. All these events, have considerably ruined the charm of the country in terms of foreign investment.
Domestic tensions in the core of the country's power might mark 2011 and could have an impact on the the economic situation of the country. The actual economic situation is very bad with very few positive perspectives for 2011. Inflation is climbing up and unemployment continues to increase, these facts are provoking the active forces of the country and notably, the young citizens, to leave Iran.
Main branches of industry
Agriculture contributes nearly 10% to the GDP but employs one-third of the active population. Only 10% of the land is arable and primitive farming methods are still used. The main crops are pistachios (world largest producer), wheat, rice, oranges, tea, and cotton. Illicit cultivation of the opium poppy is fairly common. Iran is rich in mineral resources, mainly: oil (4th largest producer in the world), and gas (2nd place in reserves in the world), copper, lead, zinc, etc.
Oil production represents 10% of the GDP. Industrial and mining sectors contribute nearly 26% to the GDP. The textile industry is the second most important after the oil sector. Other major industries are sugar refining, food-processing, petro-chemicals, cement, and construction. Traditional handicrafts such as carpet weaving and the manufacture of ceramics, silk, and jewelry are also important to the economy.
The services sector contributes to nearly half of the GDP.
International trade
Iran is a member of the Organization of Petroleum Exporting Countries (OPEC). The share of foreign trade (exports + imports) in the country's GDP is nearly 50%, with oil accounting for 80% of the exports income. The top three export partners of Iran are: Japan, China and the European Union. Besides oil, Iran mainly exports pistachio nuts, carpets, petro-chemical products, organic chemicals, aluminum, and plastic materials. Its top three import partners are: the United Arab Emirates (which plays the role of re-exporting center), Germany and France. The main goods imported are: machinery, iron & steel, electric & electronic equipment and cereals.
The Iranian population is young and foreign consumption goods are in high demand, which could offer a dynamic market for imports into the country. It is important to mention that a large part of these foreign products are smuggled into the country through Dubai.
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Last updates: February 2012
