The Stagflation Giant Became Breathless

In recent days, the central bank released some of its most important statistical reports. For instance, central bank's 'Namagarhaye Eghtesadi Magazine' (Economic Indicators Magazine) which covers statistics and figures related to the country's GDP and economic growth, has been published for three periods in Spring, Summer and Autumn 2013 and simultaneously. Details of changes in production rates in the country have been presented in the "report on Iran's economic developments during 9 months in 2013". Another important statistics which has been published by the central bank two weeks ago was a brief report on the consumer price index during May which has been demonstrating the latest trend of inflation in the country's economy.
These reports were significant from the viewpoint that they showed the latest statistical image of the stagflation in the Iranian economy. In previous years, Iran's economy has experienced reduction and negativity of economic growth on one hand, and acceleration of inflation on the other. This situation has been called "stagflation"; an unusual situation in economy in which both indexes of inflation and economic growth reached to a very undesirable level. This situation was undesirable from the point of view of the economic theory which says naturally, there is an alignment between "inflation" and "economic growth". This means that usually the rise of inflation leads to economic growth (i.e., economic boom, at least in the short term), and fall of inflation causes a relative stagnation. But the economic situation in Iran, especially during last spring demonstrated quite the opposite of this prediction. Because on the one hand, the economic growth reached to around minus 7 percent which was one of the most severe economic downturns in the country's history, and on the other hand, except from a 10 months period in 1995, the inflation rate has risen to 45 percent, and this level of inflation was unprecedented in the country's statistical history. Apart from the so-called period, this kind of inflation had a record only during 1941 to 1942 in Iran's economy. That is the period Iran has been occupied by the allied forces (during the World War II) and the economic crisis reached to the point that "the Bread Riot" happened in Tehran in 1942. In addition to the inflation, economic data related to the past years display that economic growth of 6.8 percent has also been unprecedented in the country. Economic growth in Iran has only been calculated from 1959 onwards, and current statistics represent that before 2012, only from 1977 to 1988 (years of revolution and war), Iran has experienced negative economic growth. These two issues suggest that Iran's economy in the final two years of the previous government, i.e., from 2012 to 2013 has never had a good situation from the perspective of economic indicators.
However, the latest published figures can be deemed as pooping the stagflation giant and hope for the economic variables to return to the logical path. Economic growth in the first nine months of last year was minus 3.4 percent, compared with the rate of minus 6.8 percent in 2012 that indicates the negative growth rate has been halved, and it strengthens the hope for positive economic growth this year. The inflation index which increased up to 45 percent during last year has been slaked to 14.6 percent in one year (point to point inflation) which demonstrates the general level of prices during last year has been raised less than 15 percent. Thus, one can hope the average inflation to reach below 20 percent by the end of this year. All these developments give hope that in case of continuation of the previous process, the red sirens of the Iran's economy during the past two years to be replaced with green lights which illustrate "spinning the factories' wheels" with increasing the economic growth and "stop shrinking the household goods" with high levels of inflation.