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Iran's Economy Minister Masoud Karbasian was impeached by the country's parliament on Sunday, in the latest blow to embattled President Hassan Rouhani as he struggles to face down a mounting economic crisis.

Karbasian is the second cabinet minister to be sacked this month, following the impeachment of Labour Minister Ali Rabiei on 8 August who opponents blame for the 12 percent rise in unemployment.

The minister lost the vote of confidence, which was carried live on state radio, by 137 votes to 121, with two abstentions.

The outcome sees him stripped of his post with immediate effect, leaving Rouhani to pick a replacement.

Iran has struggled with high rates of inflation and joblessness for years, despite a slight improvement following the 2015 nuclear deal with world powers, which lifted international sanctions and saw a flood of foreign investors.

Critics say the government squandered the opportunities presented by the 2015 nuclear deal and have failed to tackle high rates of inflation and joblessness.

Rouhani's hopes of attracting vast sums of foreign investment were nipped in the bud after the US abandoned the nuclear deal in May and reimposed sanctions.

Major European firms, including France's Total, Peugeot and Renault, and Germany's Siemens and Daimler, have all announced their departure since the US announcement.

Rouhani's conservative opponents - who long-opposed his outreach to the West and efforts to improve civil liberties - say the primary blame lies with government corruption and mismanagement.

"Inefficiency and lack of planning have nothing to do with sanctions," said one lawmaker, Abbas Payizadeh, in a speech ahead of the vote.

"Wrong decisions have harmed the people and led to individuals looting public assets," he added.

Rouhani, a political moderate, can still count on the support of a sizeable reformist bloc in parliament, but even some of its key figures have grown disillusioned.

"What have we done with this nation? We made them miserable and wretched," said Elias Hazrati, of the reformist Hope faction in parliament.

"The middle class are moving towards poverty," added Hazrati, who broke ranks to vote in favour of the impeachment.

The impact of the return of sanctions have ramped up political tensions inside Iran, which has seen days of protests and strikes in multiple towns and cities over water shortages, high prices and wider anger at the government.

Severe reporting restrictions have made it impossible to verify the swirl of claims coming through social media.