August 19, The Iran Project – After winning re-election in a landslide in May and securing 57 percent of the votes, now President-elect Rouhani needs to fix the economy, fulfilling his promises.
Though, the Islamic Republic has faced a significant boom in its oil output following the implementation of the nuclear deal struck with P5+1 in January 2016, the sharp drop in oil’s global prices has left a negative impact on the Middle Eastern nation’s revenues, including Iran.
Hassan Rouhani’s administration’s main obstacle is creating a balance between inflation rate and recession.
A former economy Official suggests that luring foreign investment and reforming the country’s isolated banking system, as well as the issuance of securities would contribute to battle economic challenges Rouhani government faces.
Former head of Monetary and Banking Institute of Iran, Ahmad Mojtahed, in an interview said that encouraging investment in both levels, domestic and foreign, could offer an effective solution to the recession and unemployment problems.
“The foreign direct investment is very unlikely to leave a negative impact on the inflation rate but it is capable of boosting the industrial sector. The flow of foreign investment can contribute to creating new job opportunities and eventually it can lead the economy out of recession,” Mojtahed added.
Elsewhere in his remarks, he noted that “to climb out of the recession Iran needs to lure foreign investment and to meet this goal the country’s banking system needs to fully adopt international standards, because in the lack of banking cooperation there is no chance of attracting foreign investment.”
Many large European banks still reluctant to engaging in transactions with Iran due to fear of running afoul of the US regulations.
Iran inflation rate had climbed above 30 percent, before President Rouhani taking office in 2013. However, for the first time over the past 26 years, that figure declined into a single-digit row, bottoming out at 8.6 percent in June 2016. Despite that fact, according to the country’s Central Bank (CBI) report for the 12-month period ending on July 21, inflation rate peaked at 10.3 percent.