News ID: 190952
Published: 0652 GMT April 16, 2017

Rouhani government prevented economic collapse

Rouhani government prevented economic collapse

By Mahmoud Khataee*

Most people contend that President Hassan Rouhani's administration has recorded great economic achievements it its four-year tenure. The incumbent government boosted the national economy which was on the verge of collapse.

Central Bank of Iran (CBI) figures indicate a growth in the national economy during the Rouhani administration which experienced a nearly seven-percent negative rate under the previous government.

The incumbent administration has also added to its record a single-digit inflation rate which was over 40 percent before Rouhani assumed office in 2013.

On aggregate, the government has emerged successful in taming galloping inflation and boosting the national economy. However, efforts are required to bring the unemployment rate down and promote productivity.

With respect to the government's four-year economic achievements, some have raised a question, "Couldn't the government perform better in tackling unemployment and boosting productivity?"

Huge investment is needed to generate jobs and overcome unemployment. The administration has not been able to attract sufficient investment to combat joblessness. This is because the removal of obstacles which discourage foreign investment is beyond its authority.

Politics and economics are the two inseparable aspects of economic growth. A high economic growth rate is achieved when stability and political rationality dominate a country over a long period.

No one can expect national production to grow under political challenges.

Such realities are palpable following the conclusion of the Iran nuclear deal. The accord has significantly helped the government make major economic gains. If the agreement had not been reached, the administration would not have been able to materialize such gains.

Besides, the banking system plays a significant role in boosting economic indices. Unfortunately, centers of powers which fall beyond government's authority, do not permit reforms in the banking system. These reforms are needed to reduce high interest rates on loans to enable a thriving production sector.  Political determination is needed to initiate the reforms to surmount hurdles which have plagued the national economy.

To sum up, the following recommendations should be pursued to improve the national economy.

First of all, efforts should be made to draw foreign investment, improve the business ambience, reform the banking system, reduce interest rates on loans, boost the tourism sector, etc. Likewise, political, social and economic decisions should be based on coordination. Furthermore, people from all strata of the society should play a role in advancing the country's affairs.

 

*Mahmoud Khataee is a retired associate professor of Allameh Tabataba'i University

   
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