EconoMonitor :

Introduction. On the eve of the Iranian presidential election in May, Iranian President Rouhani has much to feel good about. Thanks to his tireless efforts, Iran’s economy has moved from a recession in 2015/2016 to 7.4% GDP growth in the first half of 2016/2017. But U.S. President Trump’s opposition to the nuclear agreement could deter investment and trade with Iran and threaten to turn Iran’s recovery into another painful recession for the embattled Iranian people.

UN Sanctions. One thing is certain. The UN economic sanctions in response to the Iranian nuclear program devastated the Iranian economy. The sanctions targeted everything from shipping and banking to foreign investment and exports. The sanctions also limited Iranian revenues and stymied industry. Over $100 billion in financial assets were blocked. The volume of oil exports fell over 50% (from 2.5 MBD to 1.4 MBD). Car production fell by 40%. One out of every five Iranians was jobless. The economy was 15 to 20% smaller than it would have been without the sanctions. That’s the equivalent of the Great Depression in the US in the 1930s.

Self-Imposed Sanctions. But lifting sanctions is not enough for Iran to be competitive in the global economy. Iran also needs to end the crippling sanctions it has imposed on itself. If Iran is to escape the trap of poor management and inefficiency, Iran must ensure that privatization creates a real private sector rather than a semi-governmental sector. It can take months to get a new company registered due to bureaucratic inefficiency and corruption. The Iranian economy suffers from price controls, import tariffs or other interventions. Efforts at corporate restructuring are frustrated by an archaic Napoleonic commercial code...

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