We don't tend to think of Iran as a paragon of economic reform, and we certainly don't expect an organization like the International Monetary Fund--perhaps the most prominent symbol of the Western capitalism Iranian President Mahmoud Ahmadinejad disdains--to recognize Iran as such. On Thursday, though, The Wall Street Journal examined the IMF's "rosy" report on Wednesday that the Iranian economy grew by 3.2 percent this year on the strength of greater agriculture production and higher oil prices. The IMF praises Iran for cutting $60 billion in subsidies of energy and food products in December while containing inflation, noting that "the subsidy reform is expected to increase efficiency and competitiveness of the economy, improve income distribution, reduce poverty, and help Iran unlock its full growth potential."
The Journal, however, recommends you take those numbers with a grain of salt (Dina Esfandiary of the International Institute for Strategic Studies in London agrees, while Bloomberg reports the same news less skeptically). For starters, the report contradicts an IMF assessment in April that the Iranian economy wasn't growing at all--a report that appears to have relied on independent economists rather than official Iranian data and that drew fierce criticism from Iranian officials, spurring the IMF to revise its analysis. The Journal adds that the IMF analysis is also at odds with the view of many Iranian analysts, who claim the mismanaged and inefficient economy, beset by international sanctions related to Iran's nuclear program, is actually contracting dangerously. Far from praising the subsidy reform, the paper observes, many Iranians are blaming the strategy for stoking inflation and market volatility.