Iran's New Economic Slump
Frontline's Tehran Bureau / Kevan Harris

The government's failure to support industry after reforms in energy subsidies last year is a central cause of the slump...the government of President Mahmoud Ahmadinejad did little to aid industries...It also banned businesses from increasing prices for a long list of household goods to prevent inflation. So, Iranian industries were squeezed on both sides....the government is more worried about its citizenry than its industry....But if industries continue to stagnate, unemployment is likely to increase, as businesses cut costs by laying off more employees, forego paying overdue wages and pensions to workers, and close down production lines...

...Iran's main challenge will be "restructuring of enterprises through the adoption of more energy-efficient technologies, and the broader reorientation of the economy towards less energy-intensive products and services, and production technologies." Yet even as other emerging economies--such as Brazil, India and China--are successfully retooling industries for a competitive global market, Iran's approach is decidedly hands-off. Officials are not dealing with basic questions, including what industries will be viable without subsidies.

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