Growth Rate Forecast: From Below One Percent to Five Percent

Radio Farda - According to Tasnim News Agency, Ali Rabiei, the Minister of Labor, Cooperatives, and Social Welfare, has predicted Iran's economic growth rate to be five percent for the current solar year. Mir-Ali Hosseini asks Fereydoun Khavand if this prediction is achievable. Fereydoun Khavand: The growth rate, which is the most important economic indicator of countries, is measured based on fluctuations in gross domestic product (GDP). GDP is the value of all goods and services produced in a country over a specific period, such as a year. If the GDP value in a country has low growth compared to the previous year, or worse, is negative, that country is in distress, its production systems are faltering, and employment levels drop. Negative growth was a disaster that struck Iran's economy in the years 2012 and 2013. In 2014, it seems that Iran's growth rate reached three percent. For the current year, Mr. Rabiei predicts a five percent growth rate. This prediction is much more optimistic than the forecasts of other senior economic officials in Iran, including Valiollah Seif, who in an interview with the Financial Times, predicted a three percent growth rate for Iran's economy this year. What predictions do international organizations have regarding Iran's growth rate this year? For 2015, the International Monetary Fund predicts Iran's economic growth at 0.6 percent and the World Bank at 0.9 percent, which shows a significant gap from the predictions of Iranian officials, especially Mr. Rabiei. For 2016, the growth rates predicted by these two organizations for Iran are not much higher than one percent or slightly more. Mr. Rabiei likely bases his assumption that Iran's growth rate will reach five percent this year on the resolution of the nuclear issue and the lifting of sanctions. Will a five percent growth rate reduce unemployment? There is no doubt that lifting sanctions and normalizing Iran's relations with the international economic community will have a very positive impact on Iran's business environment, provided that the Rouhani government simultaneously implements a series of reform programs to create suitable conditions for the post-sanctions period, from reforming the targeted subsidy law to reforming the banking system, rewriting labor laws, and combating corruption. If these fundamental reforms are not carried out in Iran's business environment, the enthusiasm resulting from the lifting of sanctions will quickly fade. Regarding the relationship between growth rate and the labor market, expert circles and senior officials of the Islamic Republic, including the Minister of Labor, say that the country needs to create 800,000 jobs each year to reduce unemployment, and since each one percent growth, according to them, creates 100 to 120 thousand jobs, the country's economic growth rate must reach eight percent to control unemployment.