FACTBOX: Economic issues may decide Iran election

(Reuters) - Economic factors to watch as Iran votes on whether to give President Mahmoud Ahmadinejad a second term on June 12:

INFLATION

Peaked at nearly 30 percent in October 2008 from about 11 percent when Ahmadinejad took power in 2005. Critics blame expansionary fiscal and monetary policies, but he points to global food and energy price rises.

The official rate fell to about 18 percent in March. Analysts attribute this partly to lower oil income, likely to slow growth and government spending, and to monetary tightening under former Central Bank governor Tahmasb Mazaheri, who Ahmadinejad replaced in September.

Property prices have also dropped by up to 40 percent in some upmarket parts of Tehran according to a Western diplomat, bringing relief for those who plan to buy for the first time or rent, and officials say inflation will fall further.

Presidential contender Mirhossein Mousavi, a moderate, says he would control price rises through monetary policies and by boosting production.

UNEMPLOYMENT

Critics say government spending has failed to dent a jobless rate of around 10 percent. An Iranian development economist said official figures exclude those who would like to work more, for example many housewives and students. About 800,000 people enter the labor market each year, competing for only half that number of new jobs, he said on condition of anonymity.

OIL REVENUE

The world's fifth-largest crude exporter, Iran went on a spending and import spree while prices soared.

The price of crude has fallen nearly 60 percent over the last year. Oil accounts for 85 percent of state revenue.

Even though the price has roughly doubled from a December low, it remains below $75 a barrel, the price at which the International Monetary Fund (IMF) last year said Iran would incur current account deficits in the medium term.

Nevertheless, the head of the National Iranian Oil Company has said oil income reached $75 billion in the year to March 2009, a rise of some $7 billion on the previous year. The oil price peaked about four months into the fiscal year.

OIL INVESTMENT

Iran sits on 11 percent of the world's oil reserves and its second largest gas reserves.

Analysts say it needs more foreign investment and technology to expand production capacity, but U.N. and U.S. sanctions are deterring energy companies, especially Western ones. The state oil firm estimates annual investment needs at $25-30 billion in the oil and gas sector. On May 31, a subsidiary said Iran planned to issue $12.3 billion worth of foreign currency and rial-denominated bonds over the next three years to help finance development of its huge South Pars gas field.