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Iranian economy continues to crumble from bad to worse

Iran, World Bank, GDP


Iranian economy continues to crumble from bad to worse

In any country, the state of its economy is considered one of the country’s fundamental metrics. Economic indexes such as GDP, tourism, budget deficit or surplus, the ratio of imports to exports, living conditions of the ordinary people, etc., could tell much about the system of government and its policies.

Iran is known for its vast and expansive wealth of its natural resources. Iran holds some of the world’s largest proven crude oil and natural gas reserves. In fact, Iran is the second-largest holder of natural gas reserves in the world, with most reserves located in the offshore southwestern region.

According to the latest update of the World Bank data in July, “Iran’s GDP at current prices has decreased by 57% in 2017 from $545 billion in 2017 to $191 billion in 2020. Also, Iran’s global ranking in terms of GDP has fallen from the 26th place in the world economy in 2017 to the 50th place in the world economy in 2020.”

Despite Iran’s natural resources wealth, the reality of Iran today reveals a grim picture. Below is a quick glimpse of the economic metrics in Iran today:

Close to 80% of the people live below the poverty line and are facing daily challenges to feed their families. Due to high prices, food items such as red meat, chicken and several dairy products have become unaffordable.

Inflation in Iran is in a freefall. According to state-run media, the rate of inflation is inching towards 50%.

Excessive and uncontrolled imports have caused many manufacturing plants to close or to a decreased operation level. This has caused an increase in the rate of unemployment.

Affording to buy homes has become a dream in big cities such as Tehran, Isfahan, and Shiraz, among others. The real estate prices have had such a dramatic hike that has forced millions of people to live in the outskirts of big cities, in substandard living conditions

A day does not pass by without several gatherings or protests assembled in different cities throughout Iran. In September 2021, a total of 340 protest movements were formed in Iran in 109 cities in 30 provinces by different strata. The country’s teachers held the main and significant protests protesting their miserable situation while living below the poverty line.

One may ask what solutions or remedies will the Iranian government have to bring relief or at least partial relief to the collapsing state of Iran’s economy. The short answer is there is no solution, and the 4-decade history of the Islamic Republic of Iran proves it.

In August 2021, a report was leaked from the deputy minister of economic affairs at Iran’s Planning and Budget Organization entitled “An Estimation of the Debts of the Iranian Government to Different Sectors in the Period 2021 to 2027”. It was said that the report was compiled by Abolfazl Garmabi, an expert within the PBO’s Macroeconomic Affairs Office. The most interesting part of the report relates to estimations of the Iranian government’s debt to various sectors from 2021 to 2027. Its main purpose seems to be to warn about the worrying state of government financing and a future sharp increase in debt.

Printing banknotes selling unsecured bank drafts, excessive taxation on the poor and the remaining middle class, hefty fines, etc., have been employed in different forms and shapes to compensate for the government’s money shortfall. This cannot last for long.

The social and economic spectrum of Iranian society is rapidly changing. With the increasing dissatisfaction and discontent of the people towards the mullahs, the worsening of living conditions for the majority of the Iranians, and the quest of the Iranian people for a better future, a change for the better is destined to happen perhaps sooner than one may predict.

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Contents published under this byline are those created by the news team of WeeklyBlitz

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