Furthermore, economic growth has gone from minus 5.8% in 2013 to an estimated 7% growth in 2016. The main engine behind the growth pattern of the past 12 months has been the doubling of Iran’s oil exports in the aftermath of the implementation of the Joint Comprehensive Plan of Action (JCPOA).
The Rouhani government has managed to successfully increase oil production and also recapture lost export market shares in global energy markets. In addition, the post-JCPOA opening of the Iranian market to foreign investment has generated an impetus that is best reflected in the fact that in the Iranian year, which started on March 20, 2016, $9.5 billion in foreign investment has been absorbed.
Despite these positive developments, the government’s performance in creating new jobs has been unsatisfactory. Undoubtedly, unemployment remains the most significant challenge of the Iranian economy by far. Based on the latest official unemployment figures published in December, overall unemployment stood at 12.7% in the summer of 2016.
Though the indicator shows an improvement compared with the summer of 2013 (14.4%), the current level of unemployment can be seen as critical, especially when one considers youth unemployment of 31.9%. Evidently, the unemployment situation is a direct consequence of the country’s young demography, but the government needs to do more to improve the business climate to a degree that it facilitates domestic and foreign investment.
In fact, one area in which the Rouhani government has failed to produce satisfactory results is the improvement of business climate, especially the fight against corruption. In December 2014, Rouhani declared corruption as a national security threat and promised to fight it. However, progress has been minimal and many economic actors complain of new and unprecedented levels of corruption in the economy. In 2016, Iran was ranked 120th in the “Ease of Doing Business Index,” which is unacceptable for a country trying to attract major investment and create jobs.