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Iran Economy Latest News (2010/11/17)

_ Iran’s death spiral: Country’s rial has seen accelerated slide since September (Gulf News)

Since early September, there has been an accelerated slide in the value of the Iranian rial. This slide has been punctuated by dramatic collapses in the demand for the rial. With each collapse, there has been something akin to a “bank run” on rials — with a sharp rise in the black market (read: free market) rial-US dollar exchange rate (see the accompanying chart). Ironically, Iranians are clamouring for US Dollars.

It is worth mentioning that the black-market rate is an unbiased metric. In a land where the signal-to-noise ratio is very low, the black-market rate represents an important piece of objective information. It says a great deal about the state of the Iranian economy and the populace’s expectations.

On 8 September 2012, the black-market rial-US dollar exchange rate was 23,040. In the course of just under a month, after two big sell offs, the rate settled at 35,000 on 2 October 2012. That is a 34.2 per cent depreciation in the rial, relative to the greenback. It was at this 35,000 rial-US dollar rate that I first calculated the monthly inflation rate implied by the rial’s depreciation. The implied monthly inflation rate was 69.6 per cent. Since the hurdle rate to qualify for hyperinflation is 50 per cent per month, Iran registered what appears to be the start of the world’s 58th hyperinflation episode.


Economy, Entitlements, Iran Are Americans’ Top Priorities (GALLUP Politics)

Americans are very clear on what President Barack Obama’s top priority should be in his second term. Restoring a strong economy and job market ranks No. 1 out of a list of 12 issues, with more than nine in 10 Americans saying it is extremely or very important that Obama take major steps to make this happen. Additionally, more than three-quarters attach high importance to his ensuring the long-term stability of Social Security and Medicare, and preventing Iran from developing a nuclear weapon.

Importance of Goals for President Obama's Second Term, November 2012

Solid majorities of Americans in the Nov. 9-12 USA Today/Gallup poll also put heavy emphasis on significantly reducing the United States’ dependence on fossil fuels, making college education more affordable, making major cuts in federal spending, and simplifying the tax code by lowering rates and eliminating deductions and loopholes.

Not only do at least seven in 10 Americans rate all of these goals as extremely or very important, but majorities of Republicans as well as Democrats agree on their importance. In other words, there is bipartisan consensus that these goals are important.

On the reverse side of things, relatively few Americans, including fewer than four in 10 Republicans or Democrats, consider making major cuts to military and defense spending a high priority for Obama.

Importance of Goals for President Obama's Second Term -- by Party ID, November 2012

Surtaxing the Rich and Global Warming Are Most Divisive

All will not be so easy for President Obama to navigate, however, as is evident in the broad partisan disagreement seen on two issues in particular — raising taxes on the wealthy and addressing global warming. At least seven in 10 Democrats consider each of these highly important for Obama to do, but that contrasts with 20% of Republicans and slightly less than half of independents.

The poll also finds a significant partisan gap in ratings of immigration priorities. By 82% to 48%, Republicans are much more likely than Democrats to say that stopping illegal immigration should be a top priority. However, by a smaller 49% to 25% margin, Democrats are more likely to say providing a path to citizenship for illegal U.S. immigrants should be a top priority.

Importance of Goals for President Obama's Second Term -- by Party ID, November 2012


U.S. Escalation Against Iran Would Carry High Cost for Global Economy (IPS)The six plausible scenarios of U.S.-led actions against Iran included isolation and a Gulf blockade. Credit: U.S. Navy photo by Photographer's Mate 2nd Class Matthew J. Magee

The world economy would bear substantial costs if the United States took steps to significantly escalate the conflict with Iran over its controversial nuclear programme, according to the findings of a Federation of American Scientists’ (FAS) special report released here Friday.

Based on consulations with a group of nine bipartisan economic and national security experts, the findingsshowed the effects of U.S. escalatory action against Iran could range from 64 billion to 1.7 trillion dollars in losses for the world economy over the initial three-month term.

The least likely scenario of de-escalation, which would require U.S. unilateral steps showing it was willing to make concessions to resolve the standoff, would result in an estimated global economic benefit of 60 billion dollars.

“The study’s findings suggest that there are potential costs to any number of U.S.-led actions and, in general, the more severe the action, the greater the possible costs,” Mark Jansson, FAS’s special projects director, told IPS.

“That being said, even among experts, there is tremendous uncertainty about what might happen at the higher end of the escalation ladder,” added Jansson, the second author of the report after Charles P. Blair, an FAS senior fellow on state and non-state threats.

The six plausible scenarios of U.S.-led actions against Iran included isolation and a Gulf blockade, which would include U.S. moves to “curtail any exports of refined oil products, natural gas, energy equipment and services”, the banning of the Iranian energy sector worldwide (incurring an estimated global economic cost of 325 billion dollars), and a comprehensive bombing campaign that would also target Iran’s ability to retaliate (incurring an estimated global economic cost of 1.082 trillion dollars).


Economy Minister: Sanctions on Iran Affecting World Economy (FARS News Agency)

Iran’s Economy Minister Seyed Shamseddin Hosseini said that the world industrial countries are having a difficult time due to the US-led sanctions on Tehran, and added that food prices have risen considerably in the global markets.
“Sanctions against Iran have created difficult conditions for the industrial countries,” the Iranian minister told reporters on the sidelines of a ministerial meeting of the UN Economic and Social Commission for Asia and Pacific (ESCAP) in Tehran on Wednesday.He noted that the unilateral sanctions have made the world markets unstable and increased the global food prices, adding that Iran has reduced its crude oil sales to foreign countries and the country’s parliament plans to further reduce crude exports to increase supply of oil products to gain more value added.Earlier this year, the Iranian economy minister said that the country’s Gross Domestic Product (GDP) doubled in the last five years, adding that the powerful growth proves Tehran’s ability to successfully defuse the western sanctions.
Iran aims for baby boom, but will public agree?

Like many countries, Iran is concerned that its low population growth rate, estimated at one per cent by the United Nations in 2011, will foster an aging population with potentially disastrous consequences for its workforce, public health infrastructure and social security network.

The government is trying to reverse the trend. But it faces unique headwinds.

In addition to worries about money and employment they share with millions of young people around the world in an economic downturn, Iranians must contend with high inflation, a plummeting currency and the possibility of war if Israel follows through on threats to strike Iran’s nuclear sites.

Changing ideas about the role of women and the family also play an important part.


ran is on the cusp of being able to triple output of nuclear material that, if further treated, could be used in the core of a bomb, a new UN atomic agency report showed.

The International Atomic Energy Agency (IAEA) quarterly update said that fitting out of the Fordo plant was now “complete” — despite extreme sanctions pressure.

Fordo, which Iran only told the IAEA about in 2009, began in 2011 to enrich uranium to purities of 20 percent, a process that lies at the heart of the international community’s concerns.

Enriched to this level, uranium can be used to produce medical isotopes — Iran’s stated intention — but when further enriched, a relatively easy process, it can go in a bomb.

If Iran uses the new machinery at Fordo to enrich uranium to 20-percent levels — it has not told the IAEA whether this is its aim technically — production could increase from 15 kilos per month now to around 45 kilos, a source said.

Experts say that around 250 kilos of 20-percent uranium is needed to convert into enough 90-percent material for one nuclear weapon.

Making a bomb also requires a whole range of other activities such as working out how to get the fissile material to explode, and putting it in a warhead in a missile.


Tehran Stock Exchange Reaches Historic High (Tehran Times)

The main index of the Tehran Stock Exchange (TEPIX)  hit a historic high at 31,336 point on Wednesday.
The Tehran Stock Exchange increased 121 points on Wednesday, while the industry index climbed 131 points, reaching 26,321.
The Tehran Exchange Market’s value has increased steadily in current year despite U.S.-led sanctions on Iran’s economy.
While the stock markets of the Middle East and North Africa region saw a very poor year in 2012, Tehran Stock Exchange experienced an unprecedented growth, leading the financial markets of the region.
Sanctions against Iran have done nothing to dent a boom in its stock market, as investors bet on a continued rise in company stocks which have been undervalued for years.
The index has now posted a very high jump since March 20, when it reached 12,537 points on the last day of the Iranian year.


The UN Food and Agriculture Organization (FAO) says Iran is the 11th leading producer of wheat in the world in 2012.

According to the latest FAO report, “Crop Prospects and Food Situation,” Iran’s wheat production has reached 13.8 million tons in 2012.
The report added that Iran’s wheat production in 2011 was 13.5 million tons and the country ranked at 13th place of world’s largest wheat producers.
Among the major producers of wheat, the European Union (EU) with 130.8 million tons and China with 119 million tons are set to be the top two producers of wheat this year.

War with Iran would be devastating, to a Middle East in transition, to US interests from Afghanistan to Egypt, and to the global economy. The time available for averting conflict is limited. Israel-Palestine, by contrast, is a draining confrontation but not today the potential spark to a conflagration; nor does it offer any new encouraging elements; nor is it likely that Netanyahu, if re-elected next year, would cease using Iran as a diversion from serious engagement with the Palestinians, who are divided in crippling ways they and the US are reluctant to address.

But do any new avenues with Iran exist? Is there any political space for them? During Obama’s first term Republican machismo prevailed on  many fronts. Demonisation of Iran was a never-ending source of rhetorical inspiration. Democrats were not far behind.

Diplomacy is in urgent need of resurrection. It is becoming a lost art in an age of declamation.


The Indo-Iran Joint Commission Meeting, which was to be held from November 19-20 in Tehran, is being rescheduled.

“The 17th round of Indo-Iran JCM has been postponed due to Parliament session and we are working on new dates for the meeting,” official sources said.

India and Iran hold regular bilateral talks on economic and trade issues at the Indo-Iran JCM, which is jointly chaired by the foreign ministers of the two countries.

The 16th Joint Commission Meeting was held here in 2010 during which six MoUs, including air services agreement and agreement on transfer of sentenced persons, were inked.




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