For Rouhani’s Reelection, It’s Still the Economy, Stupid

By Ahmad Majidyar | Fellow and Director of IranObserved Project - The Middle East Institute | Nov 30, 2016
For Rouhani’s Reelection, It’s Still the Economy, Stupid

The Central Bank of Iran (CBI) has announced that the inflation rate for the past 12 months stood at 8.6 percent – down from 11.9 percent from the same period the year before. Previously, the Statistical Center of Iran had put this year’s figure at 7.5 percent.

Reducing inflation – which had risen to astronomical figures of 32 to 42 percent during the Ahmadinejad government – was one of President Hassan Rouhani’s key campaign promises in 2013.

But while official statistics shows a significant drop in inflation rate, many inside Iran question the figures and complain about soaring prices of food and public services and their declining purchasing power. The price of beef, for example, has gone up by 20 percent in the past one year.

An editorial dated November 29 in Afarinesh, a newspaper affiliated with the Islamic Azad University, writes that government figures about positive economic trends and declining inflation are odds with constant increases in prices of food, housing and public services. It adds that people are disgruntled by widespread corruption in the government and price hikes, and warns that repeating positive statistics while people are suffering would hurt the incumbent government in next year’s presidential election.

A recent poll showed that Rouhani’s popularity has significantly declined as only 37 percent of those surveyed had a favorable view of economic conditions in the country – a 16 percent drop from two years ago.

An increase in oil production and foreign investment is likely to boost the Iranian economy in 2017. But if the Trump administration annuls the 2015 Iran nuclear accord or imposes additional sanctions on Tehran, a deteriorating economy could undermine Rouhani’s reelection bid next May.

Read more: