Misery Index Reaches Lowest in Past 4 Years

EghtesadOnline: Inflation and unemployment are economic indices that directly affect people’s well-being.

News ID: ۷۸۱۱۶۴

14 January 2018

Inflation erodes purchasing power and unemployment leads to poverty. Therefore, the misery index, which is calculated on the basis of inflation, unemployment and interest rates, can clearly picture the economic well-being of the economy.

Over the past 21 years, from the fiscal 1996-97 to 2016-17, the highest misery index was registered for 2013-14 when it reached 22.5 while the lowest rate was posted at 10.7 in the last Iranian year, the Persian daily Iran reported.

In 2013-14, the inflation rate increased by 34.7% coupled with the unemployment rate of 10.4%. Three years later, as the inflation dropped to 9% and the unemployment rate hit 12.5%, the lowest misery index was registered over 21 years, according to Financial Tribune.

The second and third highest rates of misery index were registered in 2012-13 and 2008-9 when it reached 21.3 and 17.9, respectively.

The fiscal 2011-12 and 1999-2000 were the fourth and fifth most miserable years for the country in 21 years with 16.9 and 16.8, respectively.

The misery index was at its second lowest level in 2005-6 at 10.9. Also, the third lowest rate of 11.3 was posted for 2009-10. The fourth and fifth lowest rates were recorded in 2015-16 and 2006-7 with 11.4 and 11.6 respectively.

It is worth mentioning that lower misery index rates recorded for these years are mostly because of the decline in inflation rates rather than unemployment.

According to the Cato Institute Misery Index, Iran ranked the ninth most miserable country among 59 countries in 2016. In its report, Cato Institute considers high lending rates as the main contributing factor to Iran’s index.

But on the bright side, Iran’s ranking improved two steps compared to the year before when it stood at seventh place.

Venezuela was the most miserable nation in the world, followed by Argentina, Brazil, South Africa, Egypt, Ukraine, Azerbaijan and Turkey. Japan and China were two of the world’s least miserable nations, thanks to falling prices and low unemployment.

The misery index, created by economist Arthur Okun, helps determine how the average citizen is doing economically and is the sum of the inflation, interest and unemployment rates, minus the annual percentage change in per capita GDP.

According to the Cato Institute's report, Iran’s misery index has had a 40% improvement since President Hassan Rouhani took office in Aug. 2013, as it went down from 48.8 in 2013 to 29.3 in 2016.

In 2014 and 2015, the index for Iran stood at 49.1 and 36.7 respectively. Excluding 2014, the trend shows that the index has been treading the path of betterment.

> Latest Reports on Misery Index Components

According to the Central Bank of Iran's latest report, the average goods and services Consumer Price Index for urban areas in the 12 months ending Dec. 21 increased by 10% compared with last year’s corresponding period.

The Statistical Center of Iran has put the inflation for the same period at 8%.

According to SCI's latest report, Iran’s unemployment rate in the second quarter of the current fiscal year (June 22-Sept. 22) stood at 11.7%, registering a 1% decline compared with the same period of last year and a 0.9% decrease compared with the previous quarter.

The report shows that 3.15 million Iranians were unemployed this summer. It also shows that 9.6% of men (or 2.07 million) and 20% of women (or 1.08 million) of ages 10 and above were jobless during the second quarter.

The youth unemployment rate, i.e. the proportion of the population between the ages of 15 and 29, stood at 24.4% this summer, posting a 2.3% decrease compared with last year’s corresponding period and a 2% drop compared with the previous quarter.

As for economic growth, SCI's recent report shows Iran's economy grew by 5.6% in the first half of the current fiscal (March 21-Sept. 22) compared with last year's corresponding period. SCI has put H1 growth at 6% without taking into account oil production.

The report shows gross domestic product stood at 3.82 quadrillion rials (around $91 billion) for the six months, including the oil sector, and 3.05 quadrillion rials ($73 billion), excluding it.

Agricultural production expanded by 0.9% while the industrial sector (comprising crude oil, natural gas and other mineral extractions, industrial production, energy and construction) grew by 4.4%. The services sector saw the highest growth of 7.2% during the first half of the current year.