The new Iranian government says the Iranian economy contracted a substantial 5.4 percent in the last Persian year, almost triple what the International Monetary (IMF) had said and the third worst economic growth figure in the entire world last year.
In January, the IMF said the Iranian economy shrank by 1.9 percent in 2012. In February, the US Treasury said the shrinkage was somewhere between 5 percent and 8 percent.
The new Iranian figure of 5.4 percent is for a slightly different period, from March 21, 2012 through March 20, 2013. But the figures overlap for nine months.
The irony is that the official Iranian figure has the effect of saying that the US government understands the Iranian economy better than the IMF.
The Iranian Students News Agency (ISNA) quoted Mohammad-Baqer Nobakht, the deputy president for planning, as announcing the 5.4 percent shrinkage Tuesday.
ISNA said the number was calculated by the Statistical Center of Iran and confirmed by the Central Bank and by the Economy Ministry. In other words, those three agencies, which have often produced conflicting numbers, agree on the 5.4 percent shrinkage.
According to the CIA Factbook (which uses the IMF figure of 1.9 percent shrinkage for Iran), only two countries in the world contracted by more than Iran’s new official figure: Greece at minus 6.4 percent and South Sudan with minus 53.0 percent.
South Sudan simply isn’t functioning economically. Greece is known as the basket case of Europe. And Iran is only marginally less worse off than Greece.
There may, however, be reason to take the new figure with a grain of salt. The time period is the last full calendar year of the Ahmadi-nejad Administration. The Rohani Administration, in releasing the horrendous number, is pinging on its predecessor and setting a very low bar to make its own performance in the coming months look better. If Iran’s economy in the coming year shrinks “only” 2 percent, the Rohani Administration can still claim to have done much better than its predecessor.
But even the IMF figure of 1.9 percent shrinkage is dismal. Only eight countries recorded a performance worse than that in 2012.
A key unanswered questioned is how much of that shrinkage was the result of sanctions and how much stemmed from ineptitude in the Ahmadi-nejad Administration.
The really tough and punitive EU and US sanctions only took effect July 1, 2012—half way through the year. But they will apply for all of 2013.