Pipeline Dreams

Iran’s president thinks it can become the world’s 10th largest economy. Good luck with that

January 25, 2014
January 25, 2014

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At the World Economic Forum this week, Hassan Rouhani, the president of Iran, said that his country can become one of the world’s 10 largest economies.

He said Iran could reach that goal in just three decades. But the chances of it happening are slim. In 2011, according to the most recently available data from the World Bank, Iran, with a population of around 75 million, was the world’s 23rd largest economy. While that was one position higher than in 2010, and 10 steps up from 2002, continuing to climb the ladder gets progressively harder. Iran would have to more than triple its output to reach the level of the current number 10, India.

Of course, economic sanctions have taken their toll. Eighty-five percent of Iranians say that the internationally enforced measures have hurt their livelihood. Iran has been blocked from the US oil market—the largest in the worldsince 1995. Thanks to the latest sanctions, it lost its place as OPEC’s second-biggest oil producer in 2012 to its old enemy, Iraq.

But Rouhani has admitted that sanctions are just the start of Iran’s economic woes. In November he said financial mismanagement by his predecessor, Mahmoud Ahmadinejad, had left the country in a tough spot, with stagflation and government subsidies that will be hard to phase out.

The World Bank estimates that Iran’s economy shrank by 1.5% in 2013 and will grow only by single digits for the next three years. At that pace, it would take 38 years to triple its GDP—not too much longer than Rouhani’s three decades.

Except that, by then, the rest of the world will have moved ahead too—a lot further ahead, if the last decade is anything to go by. Since 2001 the gap between the country with the 10th-largest GDP and Iran has grown by 175%. It shrank only in one year.

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