Growing Unemployment and Civil Unrest - The Real Picture in Iran

“Business is drying up, industry is collapsing. There's zero investment. I know. I see it with my own eyes.” The words of a wealthy Iranian business man on the state of his country’s economy.

Tough economic sanctions imposed by Western countries are crippling Iran. Inflation is officially at 25%, although many economists believe that the true level could be double this rate, and hundreds of thousands have lost their jobs as the sanctions have curbed export demand, and made it difficult for manufacturing companies to locate vital raw materials. Some members of parliament, have estimated that 500,000 to 800,000 people have lost their jobs in the past year alone.

The Iranian Stastical Centre stated that the unemployment rate was just 12.9 percent in the first three months of this year, however external analysts find this impossible to believe. Mehrdad Emadi, an Iranian-born economic adviser to the European Union, said that “the figures aren't even close.” He estimates unemployment to be more than 20 percent.

The International Monetary Fund (IMF) said that the Iranian economy grew 2 percent last year, but only predicts a 0.4% growth this year.

RELATED: The Real Reason Behind Oil Price Rises - An Interview with James Hamilton

The government is also struggling, and has been withdrawing generous subsidies on staple goods and fuel in a bid to rein in its own spending, but this is just compounding the woes of the people.

Electricity and natural gas prices have more than trebled since the subsidies started to be withdrawn, and any business and households are struggling to cope. Critics are blaming President Mahmoud Ahmadinejad of handling the situation poorly, and devastating the economy at a critical time.

By. Charles Kennedy of Oilprice.com