Studying the main Macroeconomic Indicators during development plans
This report will try to explore changes in important macroeconomic variables such as economic growth, unemployment and inflation during development programs. In addition to these indicators, the trend of productivity (labor, capital and total), income distribution in society (Gini coefficient), foreign trade including exports, imports and trade balance, per capita income and other issues will be addressed.
Findings show that the goals of the program in terms of economic growth have not been achieved except the first and third programs. On the other hand, a comparison of the goals and performance shows that in most of the years of implementation of monetary policy has been far from the goals of development plans. Furthermore, Development Plans were not fully achieved in terms of employment created, unemployment rate in the fifth and sixth development plans shows that despite the targets, the unemployment rate did not decrease according to the projected plan; Unemployment was 4% in the Fifth Development Plan and 1.4% in the Sixth Development Plan.
The results show that the trend of GDP per capita at current prices in the early years of the Sixth Plan has increased more than 274 times, but comparing it with fixed prices shows the impact of the trend of rising prices. in addition to, The total investment rate, which was above 30% during the first and third plans, has been declining in the fourth, fifth and sixth plans, so that in the early years of the sixth plan, the investment rate was half of the first and third plans. however, trend of foreign trade in development plans indicates that the value of the non-oil exports has increased during the development plans, but due to international and unilateral US sanctions, reduced to $ 40.2 billion a year during The Sixth Plan.
The main findings of this report are:
- The highest economic growth of the country is related to the first development plan (1989-1993),average annual economic growth rate during the first plan was 7.4%, and the lowest is related to the sixth plan (2017-2021),(- 2.8%). Studies also show that the goals of the program in terms of economic growth have not been achieved except the first and third programs.
- The study of consumer inflation during development programs shows that the lowest inflation was experienced during the third program (2000-2004) and the fourth (2005-2009), while the highest inflation was recorded in the second program (1995-1999). In the fifth and sixth programs, inflation above 20% has been experienced in the country. On the other hand, a comparison of the goals and performance of five-year development plans shows that during the first to sixth development plans (except the third plan), the performance of monetary policy has been far from the goals of development plans.
- One of the economic goals of governments is reducing the unemployment rate. Studies show that in the first program, achieving the goal of reducing the unemployment rate has been successful, so that at the end of the program, the unemployment rate fell from 14.1% in 1989 to 11.5% in 1995. But the performance of the Second Development Plan in terms of job creation and unemployment rate was not in line with the goals; According to the goals of the Second Development Plan, the unemployment rate should have been reduced to 12.6%; while it was 13%. The goals of the Third Development Plan were not fully achieved in terms of job creation, but the employment created during the Third Plan shows a significant increase compared to Second Plan. Checking the unemployment rate in the fifth and sixth development plans shows that despite the targets, the unemployment rate did not decrease according to the projected plan; it had 4% gap in the fifth Development Plan and 1.4% gap in the Sixth Development Plan.
- Productivity as one of the factors of economic growth has not been appropriate situation in Iran. Except for the first and third programs, which total, labor and capital productivity growth were positive, in other programs, productivity growth was negative (in the fourth program, labor productivity growth was positive). In the fifth and the early years of the sixth plan, negative growth of productivity index has been one of the main reasons for negative economic growth.
- The trend of real incomes of urban and rural households in development plans shows an increase in real income in the first to third plans, but from the fourth plan, households have lost their purchasing power. Also, the trend of Gini coefficient as one of the indicators of inequality has increased from the first to the fourth plan (inequality has gotten worse) and in the fifth plan, the situation of income distribution has improved with some improvement in the index, but in the early years of the sixth plan, this index has gotten worse again. Overall, Fifth Plan had the best revenue distribution. Also, cost index of the tenth to first ratio confirms the better performance of the Fifth Plan compared to other development programs. On the other hand, the downward trend of this index indicates a reduction in the gap between rich and poor.
- The results show that the trend of GDP per capita at current prices in the early years of the Sixth to First Plan has increased more than 274 times, but comparing it with fixed prices shows the impact of the trend of rising prices. In other words, despite the increase in GDP per capita at current prices, the trend of GDP at constant prices in the Fifth Plan has decreased compared to the Fourth Plan and shows a deterioration in public welfare, but the average GDP per capita in the early years of the Sixth Plan has gotten a little better.
- The total investment rate, which was above 30% during the first and third plans, has been declining in the fourth, fifth and sixth plans, so that in the early years of the sixth plan, the investment rate was half of the first and third plans. The lowest investment rate was in 2018, which was unprecedented in the years of development programs. One of the best practices is due to the Third and Fourth Development Plans, That's partly that because of exchange rate control policies and booming imports (increasing imports of capital goods), but this trend was reversed by oppressive sanctions and investment rates plummeted; So that In 2019, the total investment rate reached 15.5 percent. The low rate of investment rate is one of the obstacles to the country's economic growth, so policies should be implemented to motivate and increase investment rate.
- Examining the trend of foreign trade during development plans indicates that the value of non-oil exports has increased during the development plans. This increase was accelerated in the Fourth Development Plan due to the government's serious attention to non-oil exports in the Third Plan and investment in oil, gas and petrochemical sectors, so that in the Fourth Plan, the average annual export was tripled. This trend continued in the fifth plan. In the Sixth Plan, due to international and unilateral US sanctions, the intensity of exports was reduced to $ 40.2 billion annually. Also Imports in the fourth and fifth development plans were much higher than other plans, which was mainly related to exchange rate control policy in the 2000s. Of course, since 2012, as sanctions escalate, import management was included in the government's serious plan, and this policy caused the amount of imports to be controlled in the years of the Sixth Plan and reduced from $ 51.9 billion annually in the Fifth Plan to $ 46.9 billion in the Sixth Plan. This policy led to a decrease in the country's trade balance.