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FACTBOX: High inflation may influence voters in Iran election

Thu Mar 6, 2008 8:49am EST

(Reuters) - Rising consumer prices and other economic issues are expected to weigh on voters' minds in Iran's March 14 parliamentary election, seen in part as a referendum on President Mahmoud Ahmadinejad's policies.

World

The world's fourth-largest crude producer is making windfall gains from the high oil price and enjoys steady growth but is struggling to rein in double-digit inflation that has climbed since Ahmadinejad took office in 2005 pledging to help the poor.

Analysts say U.N. and U.S. sanctions on Iran over its disputed nuclear plans are also having an impact on its economy by discouraging Western investment in the country.

Here are some key facts about Iran's economic development, showing how inflation and other indicators have developed during Ahmadinejad's tenure:

* Consumer prices rose 19.2 percent year-on-year in the 12 months to January 20, up from around 12 percent in mid-2005, according to the central bank. Anecdotal evidence suggests the cost of some food items, including meat, have risen even more.

* Economists say lax budget policies fuelled by increased social and development spending are stoking inflation by boosting liquidity growth in an economy awash in petrodollars.

* Ahmadinejad, accused by opponents of pursuing populist economic policies, in December said he had "extensive plans" to tackle inflation by limiting the government's role in the economy and encouraging investment. He did not give details.

* On a more positive note for his government, the International Monetary Fund (IMF) has forecast Iran's economic growth at six percent for 2007 and this year, up from 4.4 percent in 2005.

* Iran's current account surplus is expected to reach $21 billion in 2007, up from $16.6 billion in 2005, the IMF said. But it said the government's fiscal position showed a deficit of 1.2 percent of gross domestic product in 2007 compared with a surplus of about the same size in 2005, despite higher oil income.

(Writing by Fredrik Dahl; Editing by Clar Ni Chonghaile)



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