The Multilateralist

The IMF is bullish on Iran

Not all economic news is gloomy. Last week, the International Monetary Fund released the findings of a report on the state of the Iranian economy. Given the web of international sanctions surrounding the country, its assessment was remarkably upbeat. Economic growth rebounded from the cyclical downturn in 2008/09 to reach 3.2 percent for the 2010/11, ...

Not all economic news is gloomy. Last week, the International Monetary Fund released the findings of a report on the state of the Iranian economy. Given the web of international sanctions surrounding the country, its assessment was remarkably upbeat.

Economic growth rebounded from the cyclical downturn in 2008/09 to reach 3.2 percent for the 2010/11, spurred by a recovery in agriculture production, and higher oil prices. Building upon their success in reducing inflation from 25.4 percent in 2008/09 to 12.4 percent in 2010/11, the Central Bank of Iran was able to contain inflation in the aftermath of the subsidy reform. As a result, consumer price inflation has only increased from 10.1 percent in December to 14.2 percent at end-May 2011.

The IMF is clearly impressed by the regime's ability to sharply reduce subsidies without sparking rapid inflation. This Wall Street Journal account suggests that plenty of observers are skeptical:

Not all economic news is gloomy. Last week, the International Monetary Fund released the findings of a report on the state of the Iranian economy. Given the web of international sanctions surrounding the country, its assessment was remarkably upbeat.

Economic growth rebounded from the cyclical downturn in 2008/09 to reach 3.2 percent for the 2010/11, spurred by a recovery in agriculture production, and higher oil prices. Building upon their success in reducing inflation from 25.4 percent in 2008/09 to 12.4 percent in 2010/11, the Central Bank of Iran was able to contain inflation in the aftermath of the subsidy reform. As a result, consumer price inflation has only increased from 10.1 percent in December to 14.2 percent at end-May 2011.

The IMF is clearly impressed by the regime’s ability to sharply reduce subsidies without sparking rapid inflation. This Wall Street Journal account suggests that plenty of observers are skeptical:

The new report surprised Iran analysts, who said these figures didn’t reflect the dire reality of Iran’s economy, weighed down by strict international sanctions, mismanagement and inefficiencies. Economists inside and outside of Iran, as well as European governments, have also questioned the accuracy of the IMF’s economic data for Iran. One European official said, "We think they’re overly optimistic."

"IMF’s new report is a big puzzle," said Paris-based economist and Iran expert Fereydoun Khavand, saying it "relies on figures from the Islamic Republic which are even disputed inside the country."  

David Bosco is an associate professor at Indiana University's School of Global and International Studies. He is the author of books on the U.N. Security Council and the International Criminal Court, and is at work on a new book about governance of the oceans. Twitter: @multilateralist
Tags: IMF, Iran

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