In its recent quarterly Economic Trends, the Central Bank of Iran reported that the economy grew by 4.6% last spring (which corresponds to the first quarter of the Iranian year 1393 and the second quarter of 2014). What appears to be straightforward reporting of macroeconomic facts has caused much controversy in the Iranian media. Controversy is part and parcel of economic data in Iran, so nothing is new there, but in this case the facts themselves are not as straightforward as one might think. Mr. Rouhani and his economic team insist that the numbers are a firm sign that the recession has ended, while the opposition dismisses the news as bogus.
Today is the first anniversary of President Rouhani in office, so I wrote a piece for Lobelog.com reviewing the economy’s performance. I noted his accomplishments –lower inflation, stopping or slowing down economic free fall and above all lifting business spirits — and setback — continued loss of jobs in industry right up to this summer. The fact that I am able to claim the latter is because of another accomplishment of his government, which I did not note in that piece — timely release of economic data.
The most recent labor force survey (LFS) results for spring, 2014, that Iran’s Statistical Center released last week must be disappointing for Rouhani’s economics team. This survey, which is collected quarterly and is put out with remarkable speed, is the only official data that give us a sense of how the economy has been doing most recently. The short report shows job gains in agriculture (by 25%), which may be mostly seasonal, and services (by 2%), while industry lost jobs (by 1.3%). The fewer number of jobs in industry is disappointing because the main benefits of the agreement between Iran and the 5+1 signed last November were expected to come in industry. The employment picture that LFS paints for industry is not very complimentary for Rouhani’s first year in office. Industrial employment, according to LFS, has been declining since he took office a year ago. Last summer, more than 7.5 million workers were employed in industry, 9 months later fewer than 7 million are working there. Agriculture and services have also lost since then, though by less, for a total of one million jobs lost since he took office.
If you are someone who pays attention to economic news and have not been hiding in a cave for the past few months, you must have heard of the famous book by the French economist Thomas Piketty, Capital in the Twenty-First Century. Since its translation was published in English earlier this year, it has sold more than half a million copies, which is astonishing for a book with many tables and charts (a publisher once told me that each chart cuts sales by 10% — there goes that bit of wisdom).
Last month people were also talking about Piletty’s book in Tehran, and this month’s Mehrnameh, published this week, has a section discussing it, including a short interview by yours truly. I must confess, as I did to the interviewer, that like most people who have bought the book, so far, I have only read the introduction (I have read, however, many of the book reviews — more pages of reviewes than of the book itself! Read an excellent early review by Branko Milanovic here). (more…)
The Statistical Center of Iran (SCI) has been gradually moving to make the micro data it collects available to a wider community of researchers. Several years ago, SCI made the Household Expenditure and Incomes Survey (HEIS) available through their publications office in the Fatemi Ave. Anyone could walk in, sign a form so SCI would know who is using the data, and pay a nominal fee to buy a CD with the raw data on it. Hundreds of researchers were able to work with the micro data, numerous Masters and PhD dissertations have been written inside and outside Iran as a result, adding to our understanding of household welfare, poverty, and inequality in Iran. But to obtain the data, someone had to go to that office to pick up the CD. Now, finally, SCI has taken a bold step to make these data available online and for free. So far, there are 29 surveys online, 1984-2012. (See below for how to access the surveys.) (more…)
So far the most visible improvement in the economy since Rouhani administration took office last August has been lower inflation. Last Bahman (Iranian month ending on February 20, 2014) the Consumer Price Index (published by the Central Bank) showed virtually no increase; the same month a year earlier it had jumped by 5.3%. During the last three months (December 21 to February 20), the CPI rose by only 1.6%, compared to 7.2% a year ago. What appears to be more stubborn is the real economy — output and employment that determine living standards. (more…)
The dominant view of the high inflation of the last three years blames it on the subsidy reform. (The latest high profile assertion to this effect came from a piece by Hashem Pesaran and Hadi Salehi Esfahani published by the Fars News Agency, to which Mohammad Ali Farzin, the former head of the subsidy reform program, responded by claming that only 10% of the inflation was due to the subsidy reform). Were it not for the fact that blaming energy prices for the destructive inflation of the last three years casts a long shadow over future policy on energy prices, the mere fact that it is wrong would not prompt me to bore the readers of this blog with yet another post on inflation. (more…)
President Rowhani has received well-deserved high marks in foreign policy for his management of the tough negotiations with P5+1 in Geneva, but his first attempt at dealing with Iran’s broken social protection system does not deserve a passing grade. I explain this in my latest post at Iran Matters. The food distribution plan that, according to an editorial in the conservative Keyhan newspaper, “could have been a gesture that the government cares about the poor … but instead it turned into insult and humiliation.”
The government seems to have made a hasty decision that transfers in kind are superior to cash, despite evidence to the contrary, as I argued in a recent post here. Tadbir, which is the motto of Rouhani’s government and translates into prudence and experience in Persian, should include economics research and the experience of other countries. Are there channels for this type of information to find its way into Iran’s policy circles?
I have my doubts about the rate of unemployment — 10.3% — recently published by the Statistical Center of Iran (SCI) for fall 2013 (Iranian year 1392), so in a piece that I just published in Lobelog.com I opted to report a rate of 14% that I estimated myself from the SCI report. The difference between the published number and mine is, as in my previous post on unemployment, all in counting the reduction in the number of people in the labor force as discouraged workers and therefore unemployed in common parlance. (more…)