Reporting on Iran-1

Tehran Stock Exchange [ TSE] is going crazy. It has broken all records and in the past 4 months, gone up by nearly 5000 points, from around 12000 it is now- on the 8th August- 16606. On the face of it, this is fine. If you have a flourishing economy, then this growth would be reflected in your SE index and pushes it up. In Iran, though, the Governor General of the Central Bank said in a press conference today that in the past 12 months, varioud sectors of the economy experienced different growth rates. Industry, according to the Governor General, grew by 7% while agriculture declined by 12%. The growth rate of Services was 2-3% and Oil sector has fallen by 2%. At the same time, the Statistical Office reported that during the first quater of 1389- i.e. during April, May and June- unemployment rate increased by 3.5% and now stands at 14.6% which is the highest rate since 2005. One reason for this impressive increase in unemployment rate- according to this latest official report, is that responding to poor market conditions, some industries had to lay off workers. If that is true, then the claims made by the Governor General need a pinch of salt to be believed. From other sources we know that textiles industries suffer from a very severe recession, and the same is true on sugar industries. To return to my initial point about the TSE index, if its impressive growth can not be explained by good economic fundamentals, then, there is a very well known name for it, BUBBLE. And bubble, by definition, will burst and it is not so much a question of 'if' but rather 'when'! Tehran Stock Exchange is no exception.