Known as Persia until 1935, Iran became an Islamic republic in 1979 after the ruling monarchy was overthrown and Shah Mohammad Reza PAHLAVI was forced into exile. Conservative clerical forces led by Ayatollah Ruhollah KHOMEINI established a theocratic system of government with ultimate political authority vested in a learned religious scholar referred to commonly as the Supreme Leader who, according to the constitution, is accountable only to the Assembly of Experts (AOE) - a popularly elected 86-member body of clerics. US-Iranian relations became strained when a group of Iranian students seized the US Embassy in Tehran in November 1979 and held embassy personnel hostages until mid-January 1981. The US cut off diplomatic relations with Iran in April 1980. During the period 1980-88, Iran fought a bloody, indecisive war with Iraq that eventually expanded into the Persian Gulf and led to clashes between US Navy and Iranian military forces. Iran has been designated a state sponsor of terrorism for its activities in Lebanon and elsewhere in the world and remains subject to US, UN, and EU economic sanctions and export controls because of its continued involvement in terrorism and concerns over possible military dimensions of its nuclear program. Following the election of reformer Hojjat ol-Eslam Mohammad KHATAMI as president in 1997 and a reformist Majles (legislature) in 2000, a campaign to foster political reform in response to popular dissatisfaction was initiated. The movement floundered as conservative politicians, supported by the Supreme Leader, unelected institutions of authority like the Council of Guardians, and the security services reversed and blocked reform measures while increasing security repression.
Middle East, bordering the Gulf of Oman, the Persian Gulf, and the Caspian Sea, between Iraq and Pakistan
petroleum, natural gas, coal, chromium, copper, iron ore, lead, manganese, zinc, sulfur
Population - distribution
population is concentrated in the north, northwest, and west, reflecting the position of the Zagros and Elburz Mountains; the vast dry areas in the center and eastern parts of the country, around the deserts of the Dasht-e Kavir and Dasht-e Lut, have a much lower population density
Persian (official), Azeri Turkic and Turkic dialects, Kurdish, Gilaki and Mazandarani, Luri, Balochi, Arabic, other
TEHRAN (capital) 8.432 million; Mashhad 3.014 million; Esfahan 1.88 million; Karaj 1.807 million; Shiraz 1.661 million; Tabriz 1.572 million (2015)
- Conventional long form
- Islamic Republic of Iran
- Conventional short form
- Local long form
- Jomhuri-ye Eslami-ye Iran
- Local short form
- Geographic coordinates
- 35 42 N, 51 25 E
- Time difference
- UTC+3.5 (8.5 hours ahead of Washington, DC, during Standard Time)
- Daylight saving time
- +1hr, begins fourth Wednesday in March; ends fourth Friday in September
has not submitted an ICJ jurisdiction declaration; non-party state to the ICCt
Iran's economy is marked by statist policies, inefficiencies, and reliance on oil and gas exports, but Iran also possesses significant agricultural, industrial, and service sectors. The Iranian government directly owns and operates hundreds of state-owned enterprises and indirectly controls many companies affiliated with the country's security forces. Distortions - including inflation, price controls, subsidies, and a banking system holding billions of dollars of non-performing loans - weigh down the economy, undermining the potential for private-sector-led growth.
- External debt stocks
- US$ 6,321,579,000
- Total tax rate (% of commercial profits)
- Real Interest Rate
- Manufacturing, value added (% of GDP)
- Current Account Balance
- US$ 12,481,000,000
- Labor Force, Total
- Employment in Agriculture
- Employment in Industry
- Employment in Services
- Unemployment Rate
- Imports of goods and services
- US$ 75,830,537,964
- Exports of goods and services
- US$ 77,677,599,160
- Total Merchandise Trade
- FDI, net inflows
- US$ 2,050,000,000
- Commercial Service Exports
- US$ 1,357,000,000
wheat, rice, other grains, sugar beets, sugarcane, fruits, nuts, cotton; dairy products, wool; caviar
petroleum, petrochemicals, gas, fertilizer, caustic soda, textiles, cement and other construction materials, food processing (particularly sugar refining and vegetable oil production), ferrous and nonferrous metal fabrication, armaments
- petroleum 80%, chemical and petrochemical products, fruits and nuts, carpets, cement, ore
- China 22.4%, India 8.7%, Turkey 8.5%, Japan 4.5% (2015)
- industrial supplies, capital goods, foodstuffs and other consumer goods, technical services
- UAE 39.5%, China 22.3%, South Korea 4.7%, Turkey 4.6% (2015)
- Country Risk Rating
- The highest-risk political and economic situation and the most difficult business environment. Corporate default is likely.
- Business Climate Rating
- The business environment is difficult. Corporate financial information is often unavailable and when available often unreliable. Debt collection is unpredictable. The institutional framework has many troublesome weaknesses. Intercompany transactions run major risks in the difficult environments rated C.
- Substantial reserves of gas and oil (second and fourth in the world respectively)
- Very low external debt
- Strategic position in the sub-region
- High inflation
- Social tensions
- Unfavorable business climate
Activity in Iran increased rapidly in 2016. The lifting of sanctions in January prompted an upturn in oil and gas exports, which returned to pre-sanctions levels. The increase in oil and gas production also helped to offset the fall in oil and gas prices. The improvement in the economic situation was also due to increased activity of non-oil and gas sectors, such as agriculture, the automobile industry, retail and transports which benefited from the removal of sanctions. The positif effects of sanction removal should continue into 2017, further supported by the gradual upturn in foreign trade and the return of foreign capital. In addition, the oil and gas sector is likely to feel the benefits of the rise in oil and gas prices. Inflation will continue to slow under the impetus of falling basic product prices and lower import costs. The Central Bank rate of interest has remained essentially unchanged since the maximum rate for deposits was reduced from 20% to 18% in October 2015, which resulted in fairly restrictive policy rates.
The small imbalance in public finances continued in 2016. Budget revenues contracted further with the fall in oil and gas prices, although increased production helped to offset this fall. Transfers to the national development fund as well as the repayment of arrears by the Iranian State to European export-credit agencies were also burdens on the public finances in 2016. In 2017, the public deficit will only be partly eliminated. The recovery in the oil and gas market should help boost budget revenues. The vitality of economic activity should further increase oil and gas revenues. The government also wants to encourage an increase in the proportion of non-oil revenues in order to implement a non-inflationary policy and to increase public investment spending. Spending is not expected to fall very much in the pre-election period. The authorities should not change the subsidy system although a measure aimed at reducing the subsidies received by wealthier households is likely to be implemented in 2017. Government employee pensions and wages could also be increased. The public debt nevertheless remains very low although the latest IMF estimates suggest that this could be close to 40% of GDP once State arrears to the private sector are taken into account.
There was a small current account deficit in 2016 despite the rise in oil and gas exports (+70%). This will return to equilibrium in 2017 but will remain precarious. The surplus in the foreign trade balance will be eroded as imports increase. The capital balance could however feel the benefits of increased FDI in 2017.
The election of Donald Trump as US President raises questions concerning the future of the 14 July 2015 agreement. He was, during his election campaign, staunchly opposed to any warming in the relations between the United States and Iran that could cast doubt on the involvement of the United States on the joint Action Plan and therefore impact the Iranian economy. Iran also faces a number of challenges on the domestic front. The presidential election that will take place in May 2017 should determine the political line to be adopted by the country both internally and internationally. The re-election of President Rouhani will lead to a greater integration on the international stage and indicate a continuation in the emerging openness initiated since 2015. The election of a more conservative candidate could result in these developments being called into question. Finally, the age of the Supreme Leader raises questions concerning the successor to the religious leader, whilst elements of the political class are feeling threatened by the process of greater openness.