* Ahmadinejad says Iran's economy "moving forward"

* Dismisses criticism of his policies ahead of election

By Fredrik Dahl

TEHRAN, May 23 (Reuters) - President Mahmoud Ahmadinejad,
dismissing criticism of his economic record ahead of next
month's election, said on Saturday Iran was showing growth of
5-6 percent despite the global downturn.

Ahmadinejad's moderate rivals in the June 12 presidential
vote have accused his government of squandering windfall revenue
when oil prices were soaring, stoking inflation and leaving the
country vulnerable when they started tumbling in mid-2008.

Analysts say high inflation and other economic
bread-and-butter issues are likely to be a key battleground in
the election campaign, possibly overshadowing the Islamic
Republic's nuclear dispute with the West.

"We deeply believe that the economic situation of Iran these
days is a stable one," the conservative president told a news
conference for Iranian media broadcast live and translated by
the English-language Press TV.

"There is negative growth everywhere you look (in the world)
... but in Iran the growth rate is positive and is over 5
percent and even 6 percent," he said.

In a 2008 report, the International Monetary Fund predicted
that Iran's economy would expand by 4.9 percent in the 2010-11
year, down from 5.2 this year.

But that was before oil prices started plunging and a
Western diplomat this week told Reuters he believed economic
growth would slow sharply in the world's fifth-largest oil
exporter, perhaps approaching zero.

"SIGNIFICANT PROBLEMS"

Ahmadinejad's main election rivals, including moderate
former Prime Minister Mirhossin Mousavi, blame him for rising
consumer prices and for failure to bring down unemployment of
around 10 percent despite profligate spending of petrodollars.

Analysts also say that Iran, which is under U.N. and U.S.
sanctions over its refusal to halt sensitive nuclear work, faces
growing economic difficulties.

"Iran's economic problems are significant: inflation,
unemployment and potentially very large deficits head the list,"
said Cliff Kupchan of Eurasia risk consultancy.

But Ahmadinejad supporters say the economy has held up well
in the face of the global slowdown and also point to falling
annual inflation in recent months, to some 18 percent in March
compared with a peak of nearly 30 percent in October.

Economists say this is partly due to the lower oil price,
which is expected to force the government to rein in spending,
as well as monetary tightening under former Central Bank
governor Tahmasb Mazaheri, who was replaced last September.

Ahmadinejad said Iran on Saturday opened a steel plant, at a
time when such production faced declines in other countries.

"We are moving forward but everything is going the other way
around elsewhere in the world," he said.

Mousavi, whose backers say he successfully steered the
Iranian economy through the 1980-88 Iran-Iraq war when he was
prime minister, has said he would seek to boost production and
improve the business environment if elected president.
(Editing by Charles Dick)