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Economy
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Iran's economy is a mixture of central planning, state ownership of oil and other large enterprises, village agriculture, and small-scale private trading and service ventures. Its economic infrastructure has been improving steadily over the past two decades but continues to be affected by inflation and unemployment. In the early 21st century the service sector contributed the largest percentage of the GDP, followed by industry (mining and manufacturing) and agriculture. In 2006, about 45% of the government's budget came  from oil and natural gas revenues, and 31% came from taxes and fees. Government spending contributed to an average annual inflation rate of 14% in the period 2000–2004. As of 2007, Iran has earned $70 billion in foreign exchange reserves mostly (80%) from crude oil exports. In 2007, the GDP was estimated at $206 billion ($852 billion at PPP), or $3,160 per capita ($12,300 at PPP). Iran's official annual growth rate was at 6% (2008). Because of these figures and the country’s diversified but small industrial base, the United Nations classifies Iran's economy as semi-developed (1998).
Close to 1.8% of national employment is generated in the tourism sector which is slated to increase to 10% in the next five years. About 1,659,000 foreign tourists visited Iran in 2004; most came from Asian countries, including the republics of Central Asia, while a small share came from the countries of the European Union and North America. Iran currently ranks 89th in tourist income, but is rated among the 10 most touristic countries in the world. Weak advertising, unstable regional conditions, a poor public image in some parts of the world, and absence of efficient planning schemes in the tourism sector have all hindered the growth of tourism.
The administration continues to follow the market reform plans of the previous one and indicated that it will diversify Iran's oil-reliant economy. Iran has also developed a biotechnology, nanotechnology, and pharmaceuticals industry. The strong oil market since 1996 helped ease financial pressures on Iran and allowed for Tehran's timely debt service payments. Iranian budget deficits have been a chronic problem, mostly due to large-scale state subsidies, that include foodstuffs and especially gasoline, totaling more than $84 billion in 2008 for the energy sector alone.
Over the past 15 years, the authorities have placed an emphasis on the local production of domestic-consumption oriented goods such as home appliances, cars, agricultural products, pharmaceutical, etc. Today, Iran possesses a good manufacturing industry, despite restrictions imposed by foreign countries. However, nationalized industries such as the bonyads have often been managed badly, making them ineffective and uncompetitive with years. Currently, the government is trying to privatize these industries, and, despite successes, there are still several problems to be overcome, such as the lagging corruption in the public sector and lack of competitiveness.
Iran has leading manufacture industry in the fields of car-manufacture and transportation, construction materials, home appliances, food and agricultural goods, armaments, pharmaceuticals, information technology, power and petrochemicals in the Middle East.
Energy
Iran ranks second in the world in natural gas reserves and also second in oil reserves. It is OPEC's 2nd largest oil exporter. In 2005, Iran spent $4 billion on fuel imports, because of contraband and inefficient domestic use. Oil industry output averaged 4 million barrels per day (640,000 m3/d) in 2005, compared with the peak of six million barrels per day reached in 1974. In the early 2000s, industry infrastructure was increasingly inefficient because of technological lags. Few exploratory wells were drilled in 2005.
In 2004, a large share of Iran's natural gas reserves were untapped. The addition of new hydroelectric stations and the streamlining of conventional coal and oil-fired stations increased installed capacity to 33,000 megawatts. Of that amount, about 75% was based on natural gas, 18% on oil, and 7% on hydroelectric power. In 2004, Iran opened its first wind-powered and geothermal plants, and the first solar thermal plant is to come online in 2009. Demographic trends and intensified industrialization have caused electric power demand to grow by 8% per year. The government’s goal of 53,000 megawatts of installed capacity by 2010 is to be reached by bringing on line new gas-fired plants and by adding hydroelectric, and nuclear power generating capacity. Iran’s first nuclear power plant at Bushehr is set to go online by 2010.
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