On Tuesday, March 20, the Supreme Leader of the Islamic Republic, while criticizing the "livelihood and economic problems of the lower classes in Iran," stated that "resistance economy" is the only way out of the current situation. In his Nowruz message, he declared the new solar year as the year of "resistance economy: production - employment" and emphasized that "the remedy lies in dividing the resistance economy into key and important points and focusing all efforts of officials and the people on those points, which are domestic production and employment, especially for the youth." While wishing for such outcomes is not a fault, politicians are more aware than anyone else that achieving these aspirations, however positive, is conditional on the existence of real groundwork and access to resources. Experience shows that unrefined aspirations usually fade under the pressure of realities.
The state of Iran's economy in the new solar year is largely determined by the status of the oil market and its foreign trade (total exports and imports). Based on global oil market indicators, this market is expected to remain turbulent this year, similar to last year, but no significant and surprising developments are anticipated; thus, crude oil prices will fluctuate within the range of forty to fifty dollars despite ongoing changes.
Due to various reasons, including competition among OPEC members and between OPEC and non-OPEC countries, as well as the impact of unconventional shale oil exports, an increase in oil prices above 60 dollars is not expected. Consequently, the total foreign currency earnings of the country—comprising oil and non-oil export revenues—are estimated to be close to eighty billion dollars at best.
The utilization of foreign currency resources, whether from oil sales or other reserves, will also be slow and difficult, as the shadow of past nuclear sanctions and non-nuclear sanctions still heavily weighs on the flow of currency and capital. According to a summary of information and statistics from international and domestic institutions, the GDP growth rate in the new solar year is expected to be limited and will decline. Various forecasts suggest that the GDP growth rate will be around five percent; therefore, no significant transformation in GDP growth is anticipated.
However, it cannot be denied that the continuation of economic growth presents an opportunity for widespread economic growth in sectors that have remained stagnant until now. The continuity of economic growth in the oil sector and large mother industries—provided there is political and economic stability and appropriate economic policies combined with other factors—can gradually spill over to other economic sectors.
In the new solar year, imports into the country are estimated to be close to sixty billion dollars at best. Thus, despite a surplus in the current account balance, there will be little opportunity to reduce international currency rates in the foreign payment balance. The lack of balance in the government budget has led to an increase in liquidity, and the growth rate of liquidity in the new year is expected to rise as it did last year, with a potential increase of 25 percent. If economic growth continues, this will lead to inflationary waves, and an upward trend in inflation rates is not unlikely.
Economic growth confined to the oil sector and large enterprises has not created new capacity but has activated previous capacities that had remained unused due to deep recession and sanctions. Moreover, economic growth has predominantly occurred in the realm of large state-owned enterprises. In support of this, Peyman Ghorbani, the Deputy Governor of the Central Bank, reported that the GDP growth rate excluding oil was 1.9 percent in the first nine months of the past year; thus, the non-oil sector of Iran did not experience significant growth last year. According to the Central Bank's report, the overall production index of large industrial workshops in the first nine months of 1395 (based on the 1390 base year) reached 96.9, which reflects a 6.8 percent increase compared to the first nine months of 1394. Increases in production and economic growth rates can reduce unemployment only when they activate various sectors, especially small and medium enterprises, sustainably and create new capacities.
The high unemployment rate is one of the major economic challenges in Iran, which, unlike some other economic variables, shows no improvement. For instance, the government and relevant agencies have succeeded in reducing the average inflation rate. Additionally, the GDP growth rate in 1395 showed an increase due to rising oil exports, the activity of large economic enterprises, and some openings in relations with the world.
However, the latest employment and unemployment statistics from the Statistical Center of Iran, published at the end of 1395, show no signs of success. These statistics indicate that in the autumn season, the average unemployment rate for the population aged 10 and older across the country was 12.3 percent. A comparison of the unemployment rate of the active population in autumn this year with the same season last year shows a 1.5 percent increase in the unemployment rate. Omid Ali Parsa, the head of the Statistical Center, announced the unemployment rate based on the 1395 population and housing census as 12.4 percent, indicating a 1.4 percent increase compared to the previous year.
According to the employment and unemployment statistics from the Statistical Center of Iran, the increase in the unemployment rate in urban areas is not the same as in rural areas, with the unemployment rate in urban areas increasing by 1.6 percent and in rural areas by 1.2 percent compared to the same season last year. Additionally, the increase in the unemployment rate among women is higher than that of men. The unemployment rate is also not uniform geographically, being higher in less developed areas of Iran than in more developed regions. In confirmation of this, Omid Ali Parsa stated that the unemployment rate in 22 provinces of Iran increased in 1395 compared to 1394. Many researchers agree that the real unemployment rate in Iran is much higher than the officially announced government rate, estimating it to be at least double the official figure. Evidence supporting this claim is that the combined average of full unemployment plus what is referred to as underemployment exceeds 22 percent, which is closer to the real average rate.
Based on the Statistical Center's classification, a significant number of underemployment cases reduce the total unemployment rate, and the creation of temporary jobs—even if only one hour of work per week—is defined as job creation. The jobs currently being created in Iran are often unstable and contribute to underemployment, which is reflected in the statistics but lacks the necessary quality. Estimates from international economic institutions, such as the International Monetary Fund, suggest that the unemployment rate in Iran is expected to rise in the new year. Factors reinforcing this estimate include the limitations on government capital investment and the increase in its current budget in recent years. New estimates of the government budget also indicate that capital expenditures will be sacrificed for current expenditures as in the past, thus eliminating investment opportunities.
Conclusion: A productive and employment-generating economy is not a bad wish, but its realization requires the existence of political, economic, and cultural groundwork in everyday life. Given the constraints outlined, Iran's economy has little room for dynamism and becoming employment-generating in the short term. The conditions for Iran's economy to become productive and employment-generating depend on the accountability of all officials, including the Supreme Leader, the transparency of all institutions, including those under the Leader's authority, and the liberation of the economy from the grip of the government and military and paramilitary institutions and their widespread corruption. The question remains whether such conditions—prerequisites for a productive and employment-generating economy—will be realized in the new year.