As a result of economic mismanagement at home, Iran is currently experiencing extensive stagflation. Although the country holds the world's second-largest natural gas reserves and the third-largest oil reserves, the balance of its Oil Stabilization Fund actually decreased during the recent period of exceptionally high oil prices. President Ahmadinejad's administration is widely criticized for imposing inflationary economic policies including the distribution of money to the poor in an effort to combat poverty and gain political support (which also hindered the country's ability to increase productivity by creating jobs). Fiscal policies that lowered interest rates and encouraged banks to lend further fed the high levels of inflation. According to official estimates, Iran's unemployment rate reached 11.8% in 2009 and its inflation rate reached 16.8% (unofficially believed to be much higher).
Source: http://www.huffingtonpost.com/shirin-mohammadi/ira...
