Is Iran facing an economic crisis?

(UPDATE: see this article about Tehran's real estate market)

I returned recently from a rather harrowing trip from a certain city where children sleep in the streets and sniff glue from bags to get high, where streets are open sewers, where entire families pick their living in the trash, where the rich travel in helicopters and bullet-proof cars with armed bodyguards for fear of the pervasive crime that results in a murder rate akin to a war zone, which is home to 40% of the region's HIV/AIDS victims, and where a more people live their entire lives in fetid slums than the population of some of the world's largest cities.

No, this wasn't in Iran (Thank God) - it was in Latin America, a country that Americans regularly go as tourists and investors. But the funny thing is that the media in the US insists on portraying Iran as economically-backwards.

Here are some facts from Is Iran Facing an Economic Crisis? by Kelly Campbell. U.S. Institute of Peace, May 2007:

The belief that Iran suffers from dire economic conditions is one of four myths circulating about Iran's macroeconomic performance. Iran's economy has actually performed well in aggregate terms, with a moderate rate of growth in the last ten to fifteen years, including healthy GDP and per capita growth in investment. In the last three years, Iran's actual growth rate has averaged 5.8 percent. 

Nor do economic indicators support assertions by some observers that inflation is much higher than the rate stated by the Iranian government. In the last fifteen years, the consumer price index (CPI) has increased by a factor of forty-two; if the inflation rate were actually twice the reported rate, the CPI would have increased by a factor of 950. Prices have increased by a factor of five in the last ten years, not twenty, as some claim. While this rate of inflation is cause for concern, it is in line with the depreciation of the exchange rate.

The third myth is that Iran suffers from widespread poverty and rising inequality. The poverty rate actually declined throughout the 1990s and continues to fall, and is low by international standards—especially when compared to that of other developing countries. Government public service and social assistance programs have helped to reduce poverty, particularly in rural areas. In addition, economic inequality throughout Iran has remained fairly stable and does not appear to be increasing.

The final myth is that unemployment in Iran is twice the official rate. Although the unemployment rate is high, it has declined since 2000 and reached 11.2 percent in 2004.2 While official statistics match World Bank estimates, the current government has failed to generate sufficient job growth to meet the needs of Iran's young, educated population. For these youth, unemployment often lasts two to three years, which has resulted in more young Iranians living with their parents well into their twenties...

To this I would add that since the Revolution, the average Iranian has gained better access to healthcare, clean water, electricity, and literacy (particularly for women) Iranians are now living longer than ever, and their children have far less infant mortality rates than ever. (In fact, there is a obesity crisis brewing among Iranian children)

From 1975 through 1980 Iran's Human Development Index remained stagnant at 0.569. By 1990 it was up to 0.693, and in 2002 it was 0.732. Life expectancy at birth in 1970-1975 was 55.3 years. For 2000-2005, it is now 70.3 years. Under-five mortality rate (per 1,000 live births) in 1970 was 191. Today its 42. Today about 90% of the people have access to basic healthcare, and even remote villages have obtained clean water, electricity, schools and roads. Iran produced about one million passenger cars this year, compared with the 12,000 manufactured in 1989.

The improvement of social indicators for women in particular were even grudgingly recognized by the habitually-sourpussed Economist magazine as early as 1997:

"Above all, prospects for girls have improved... They are now more likely to go to school and stay there; about 40% of the students in higher education are women, and they are doing better at their  studies than men. Iranian women nowadays, despite Islamic customs oppressively enforced by the state, have more chance than they did of  getting a job outside the home, competing with men professionally and asserting their rights as individuals in the face of their fathers',  brothers' or husbands' prejudices."
("The Mullah's Balance Sheet" - The Economist, January 18 1997)

This isn't  to say that Iran is an economic miracle or heaven. It most certainly is not; it has all the problems of a developing country. But you won't find slums in Tehran, nor will you find children sniffing glue on street corners.

What does this mean? It means that the Neocons who insist that Iranians are on the verge of toppling their government due to economic conditions are simply lying in order to undermine any potential US-Iran talks because they fear an potentially improved US-Iran relations would come at the expense of Israel's regional ambitions.

Comments

[Andy]

Why no mention of gasoline? A country spending upwards of a fifth of it's budget buying and subsidizing a single commodity as well as a relatively high inflation rate is a country headed in the wrong direction. If it weren't for high oil prices, the GOI would be in an economic crisis.

[Actually Iran is set to become gasoline self-reliant in less than 3 years]

[Mark Pyruz]

I posted the four myths over at the Belmont Club, which has a negative post on Iran's economy.

[Mark Pyruz]

Cyrus, the link doesn't work.

[Thanks! Link fixed]