The country, known in history as ancient Persia, in 1979 became the Islamic Republic of Iran after the overthrow and expulsion from the country of Shah Mohammad Reza Pahlavi. Conservative religious leaders created a theocratic system of government, led by a religious leader who plays the role of the supreme authority. The country's economy is heavily dependent on oil and gas exports and is under the strongest pressure from US sanctions. Iran’s GDP has nevertheless been growing in the last two years (2016 and 2017).
general information
The country's economy has almost passed to the post-industrial type. When the service sector is already the dominant sector of the economy (48.6% of Iran’s GDP), however, industry still occupies a rather large share in the economy (35.1%), the remaining 16.3% is in agriculture. The economy is heavily dependent on hydrocarbon exports, while at the same time it has a significant and strong sector of agriculture, industry and services. Iran ranks 28th in the world in terms of GDP; in 2017, the figure was 409.3 US dollars.
The country has a large public sector, the Iranian government directly controls and owns hundreds of enterprises and indirectly controls many companies and organizations. The key issues are corruption, price controls and an inefficient banking system. The country's economy received significant amounts of non-performing loans that do not contribute to the growth of the private sector.
Private business is represented mainly by small production workshops, farms, and some types of service enterprises. Medium-sized construction companies and companies producing construction materials (including cement), mining and metalworking work. A significant sector of informal market activity is flourishing in the country, in which corruption is also widespread.
The formation of the economy
The first years after the formation of the Islamic Republic, the development of the country's economy was greatly inhibited by the war with Iraq. In the 90s, the transport infrastructure began to actively develop, automotive and precision engineering became priority sectors. Actively carried out privatization. All these measures gave an incentive to economic growth, as evidenced by the increased GDP of Iran (in local currency), by the years of this period (by purchasing power parity): 1980 - 6.6 billion riyals, 1985 - 16.6 billion rials, 1990 - 34.5 billion riyals, 2000 - 580.5 billion riyals.
Economic growth continued due to increased exports of hydrocarbons. In the 2000s, oil refining and the development of alternative energy sources began to increase more actively.
In the last decade
Since the beginning of 2010, according to many experts, the country's economy is in deep crisis, as evidenced by statistics showing a drop in Iran's GDP growth by years: in 2010 - 5.9%, in 2008 - 3%, 2012 - minus 6.6 % The key reasons are considered: the ineffective economic policy of President Ahmadinejad and international sanctions.
The situation improved somewhat with the advent of President Rouhani, the economy began to grow, especially in anticipation of the lifting of international sanctions in 2016. Thanks to their abolition, Iran’s GDP reached 412.3 billion US dollars. The restoration of sanctions by the Trump administration in 2018 will have a strong negative impact on this year's performance.
