The economy of Iran is a mixed economy with a large part going to the public sector.
It is the world's eighteenth largest economy
when it comes to purchasing power parity.
About 60 percent of it is the centrally planned economy.
A large part of the economy is formed by oil and gas production and with about 10
percent of the world's confirmed oil reserves and 15 percent of the gas reserves,
Iran is largely regarded as an energy superpower.
Iran’s economy is categorized by agriculture and services, hydrocarbon
sector, and a clear state presence in manufacturing and financial services.
Freedom score
In 2018, Iran’s economic freedom score has been 50.9,
and it has been ranked at 156 as the freest economy.
Its complete score has improved by 0.4 points, with
nice improvements in financial freedom, labor freedom,
and government reliability compensating lower scores for the fiscal
state, government expenditure, and judicial effectiveness indicators.
Iran has been placed on 13th position among 14 countries of the Middle East and North
Africa region, and its overall score is lower
than the regional and world average scores.
Background Information
Before 1979, the economy of Iran was one of the
most forward-thinking economies in the Middle East.
However, from then on it has been beleaguered by maladministration,
international sanctions, political corruption, and regional strains.
The oppressive Islamic government is
controlled by Shiite religious establishments.
An uninfluential president is chosen for a term of four-year through a
process which is controlled by the clerics with hard-line approach clerics.
President Hassan Rouhani was re-elected in 2017, since then he
has tried to navigate a realistic and less quarrelsome route.
However, the Supreme Leader, Ayatollah Ali Khamenei,
is continually endorsing radical strategies.
Iran owns the world’s second-largest natural gas
reserve and fourth-largest crude oil reserves.
Rule of Law
Even though Iranians have the allowed to own the
property and establish their private businesses,
the government has a very overriding role in the
economy and can actually take away the property.
The judicial system of Iran is not self-governing and it is used
to silence the criticizers and members of the opposition party.
Corruption is prevalent at all levels of the government administration.
The hard-line clerical organizations and their
tax-exempted fundamentals are never examined.
Tax and GDP
The rate for personal income tax is 35 percent.
The rate of corporate tax is 25 percent and all
property transfers are bound by a standard tax.
The total tax burden is 7.1 percent of total domestic revenue.
In the last 3 years, government spending has reached
the figure of 17.2 percent of the total Gross
domestic product (GDP), and budget deficits have
been more or less 1.9 percent of total GDP.
Public debt is about 35 percent of the economy’s GDP.
The combined value of exports and imports is 39 percent of GDP.
Governing Efficiency
The Iranian government holds direct ownership hundreds of public
enterprises and have indirect control over several companies,
which ultimately restricts the capacity of private-sector
companies to participate in the competition.
In addition, Labor regulations are constricting,
and the labor market remains stationary.
The government has retained economically damaging price controls
and subsidies ever since the Islamic Revolution instigated.
Severe government controls limit the access to financing for
businesses and government also controls credit allocation.