Tehran: The International Monetary Fund gave a rosy portrayal of Iran's economy in a report issued on Wednesday, saying it grew by 3.2 per cent in 2010-11, surprising analysts who contend that the economy is shrinking because of the global sanctions against the Islamic Republic.
The IMF report entitled "Islamic Republic of Iran: 2011 Article IV Consultation", welcomed the economic recovery, the decline in inflation, and the improvement in the external and fiscal positions in 2010/11 of Iran.
IMF noted that the medium-term outlook remains positive on the strength of high oil prices and potential efficiency gains related to the recent subsidy reform.
The report said the country's economic growth has rebounded from a cyclical downturn in 2008-09, "spurred by a recovery in agriculture production, and higher oil prices."
Even so, the gross domestic product growth of 3.2 per cent in 2010-11 was slightly lower than the 3.5 per cent recorded in 2009-10, according to the IMF.
The IMF said that the outlook for the Iranian economy is positive, "with growth expected to rebound in the medium-term" as a result of higher oil prices and expected efficiency gains from the removal of domestic subsidies.
Iran's official statistics say the country has to create nearly two million jobs a year in order to meet unemployment demands.
The official five-year economic plan calls for an economic growth of at least 8 per cent in order to gradually absorb unemployment, which some economists think is nearly twice the official 11. 5 percent rate.
The report noted that cash transfers, financed out of the revenues arising from the energy price increase, were instrumental in supporting domestic demand, improving income distribution, and reducing poverty.
IMF welcomed the authorities' reform strategy based on privatization, a reduction of the role of the government, and market-based prices for energy and agricultural goods, with a view to achieving higher employment and growth.
The report also said that the full removal of subsidies and steadfast implementation of the ongoing tax and customs reforms are essential to further reduce Iran's dependency on oil and natural gas.