Iran's Economy Free Fall Continues
Iran is located in Western Asia and covers a total area of 1,648,195 km2, which was inhabited by around 83 million people in 2019. Iran is considered an upper-middle-income country. Its real GDP per capita was US$4,540.4 in 2019, ranking #88 in global comparison. But, at least 50 percent of the population are currently living below the absolute poverty line. Iran’s Economy
Based on Tejarat News, Iran’s economic freedom rank is 167; First of all, the Heritage Foundation’s 2021 report shows the state of economic freedom in Iran has been suppressed. Iran ranks last among the 14 countries in the Middle East and North Africa region and its score is lower than the regional and global average.
Iran ended the first month of its new Persian year in a situation where, on one hand, the economic circumstance and rising unemployment, and on the other hand, inflation and the daily decline in purchasing power for the vulnerable class have made people’s living conditions arduous and unbearable. Iran’s Economy
According to Iran Metropolises News Agency (Imna), the Plan and Budget Organization (PBO) analyzed the inflation rate in the report on economic, social, and cultural foundations and the annual plan of the executive bodies of 2021-2022 budget. Iran’s Economy
Based on statistics, Iran’s inflation in 2020 is estimated to be at 34.2 percent and also for 2021 with a slight decrease of 33.5 percent. The inflation rate in the EU, meanwhile, has fallen short of less than one percent in recent years. The inflation rate in neighboring countries is also generally in the single digits. Iran’s Economy
Referring to the International Monetary Fund statistics (IMF), the PBO wrote: “As the statistics indicate, Iran’s inflation rate is appreciably different from that of global and developed countries.” Iran’s Economy
According to the report of the Statistical Centre of Iran (SCI), in April 2021, the highest price increase compared to the same time of last year was related to the “oils and fats” group with an increase of 109.3 percent, followed by the “milk, cheese, and eggs” group with 77.4 percent, and also the group “Tea, coffee and soft drinks” is at 75.1 percent.
Red meat and poultry production 73.2 percent, red and white types of meat and their products 72.8 percent, fish and shellfish 70.5 percent, Food and beverages 63.5 percent, Electricity, water, gas, and other types of Fuels 29.8 percent. Ready-made garments and shoes increased by 55.6 percent, tobacco by 47.9 percent, as well as fruits and nuts by 62.5 percent, vegetables, and legumes by 30.4 percent.
Housing market prices have been rising daily over the past year, left buyers and sellers in an unstable situation. “We passed one of the most unpredictable real estate markets last year, and the prices rose while most of the buyers did not have the opportunity to convert their potential demand into actual demand,” an expert declared.
Since mid-November 2020, the real estate market has nearly entered a period of recession, which continued until the end of the year. As Kaveh Taheri and Pooya Nasseri have mentioned in their 2020 essay that “sanctions and Iran’s non-compliance with international financial regulations led to a major decline in Iran’s total exports and lowered oil exports”, the nation’s economic situation is in a free fall and lack of a positive outlook for the lifting of sanctions in the short term and implicit disagreement on returning to the JCPOA [Iran Deal], it seems, unlikely, that at least by the end of the spring new events will occur in the real estate market.
The housing Market Crash was also noticeable in the final months of the year, but as people expected the prices to fall, construction costs acted as an obstacle. From the last month of spring to the middle of autumn 2020, the market was accompanied by sharp fluctuations in prices and buyers were neither able to make decisions nor take action to make a certain purchase.
The housing market expert cited, since the end of 2019, there has been a sharp rise in housing market prices, whilst during the time, many analysts and experts expected that the growth rate of prices in the housing market would slow down in 2019.
The real estate and construction markets, however, are in a recession. And, since the genuine domain, development, and oil showcase are the major incomes in Iran, the downturn within the markets will significantly influence the upward development of inflation.
And, on the off chance that the concern around swelling and the unregulated esteem of the U.S. dollar on Iran’s cash are not settled, the nation will confront a four- to six-year recession in the housing sector. But owing to 40 percent swelling in service sectors and expenses within the coming year, no one anticipates housing costs to fall.
According to reports, as Iran’s Rial value falls to the lowest-ever rate against USD, persistently high inflation rates, at least 50 percent of Iran’s population are living below the absolute poverty line, whilst claimed by the official statistics in 1990, about 18 percent of Iran’s population lived below the absolute poverty line. And, the rate had been increased to about 24 percent in 1997 and 35 percent in 1998.
The inflation rate in Iran rose to 39% in 2021 from 36.5% last year.
According to the United Nations, the global economic growth is estimated at 6 percent in 2021. In a previous IMF forecast released in January, the rate was 5.5 percent. This will be the highest economic growth rate in the world since 1980. According to the forecast of this IFM, the growth rate of the global economy in 2022 will be 4.4 percent, which still is a significant rate. In its January report, the IFM forecast 4.2 percent economic growth in 2022. And, in its latest World Economic Outlook report released on April 6, 2020, the IMF revised up its estimate of Iran’s economic growth to 1.5 percent in 2020 and projected 2.5 percent growth in 2021. It estimated 4 percent negative growth in the Iranian year 2020-1. Iran experienced 13.4 percent growth in 2016.
According to a report by the Parliamentary Research Center, the unemployment rate declared by Rouhani’s administration at 9.8 percent is not genuine, and the real unemployment rate would be 24 percent, which is 2.5 times the figure announced by the cabinet.
A report released in 2020 emphasized that the unemployment rate announced by Rouhani’s cabinet is a “completely misleading indicator”, which leads the analysis astray.
In July 2020, the SCI reported that from the spring of 1998 to the same season of 1999, almost 1.5 million jobs were lost in the country as well as the unemployment rate fell by 1.1 percent to 9.8 percent.
Moreover, the SCI declared that a large number of jobseekers had quit looking for a job because they had not been able to find a job.
The IMF’s assessment also shows that Iran’s unemployment rate was 13.6 percent last year and will reach 16.3 percent this year. The IRGC-run Tasnim News, however, reported that the real unemployment rate in the summer of the last Iranian calendar year reached 18.5 percent. And, the unemployment rate in Iran is expected to reach more than 20 percent in 2021.
According to the Research Center of Islamic legislative Assembly in Iran, the COVID19 outbreak also has had a critical impact on the unemployment rate within the country.
In a recent statement, Issa Mansouri, Deputy Minister of Entrepreneurship & Employment of the Ministry of Cooperatives, Labour and Social welfare, said about 7.5 million people had lost their jobs during the pandemic, or lost the regular levels of their income as stores and businesses close across the country.
Further, the customs statistics of Iran’s Main Trade Partners show a significant decline in their imports from the Islamic Republic of Iran.
China on Friday released a report on its oil trade with the Islamic Republic, which shows that in the first 11 months of 2020, it imported an average of 75,000 barrels (worth one billion and 125 million dollars) of oil per day from Iran — equivalent to one-third of China’s oil imports from Iran in the same period last year.
The decline is due to the Chinese Coronavirus outbreak, and the fall in oil prices this year.
According to the Chinese Customs report, released its full foreign trade report on Thursday, showing that Iran’s oil and non-oil exports to the nation fell by about 55 percent in the first 11 months of 2020 to $7.8 billion, and China’s total exports to Iran also fell by 10 percent, dropped to $13.5 billion.
In early November, ICBPS reported that China, as Iran’s major trading partner, still maintains a large trade volume with Iran, but Tehran’s seven-month exports to Beijing also fell 61 percent to $ 3.5 billion. Iran’s imports from the Far East nation decreased by six percent during the same period to $5.12 billion.
Other Iran’s East Asian Trade Partners
S.Korea’s customs statistics show that it imported only $8 million from Iran in the first 11 months of this year, compared to $2.1 billion in the same period last year. South Korea’s exports to Iran also reached $167 million, dropped 40 percent from the same period last year.
Japan’s customs statistics also show that it exported $75 million in the first 11 months of this year, and half of the amount was imported from Iran.
At the same time, Japan’s exports to Iran were $63 million, and its imports from Iran were 1 billion and 223 million dollars.
The Indian Ministry of Economy, however, has not yet released its figures, but its latest figures show it imported $228 million from Iran in the first 10 months of 2020, which was $3.340 billion in the same period last year.
India’s exports to Iran have also fallen by 40 percent, dropping to $2 billion.
Thus, Iran’s total exports to China, South Korea, Japan, and India fell to a quarter of last year ($24 billion in 11 months of 2019).
Turkey and Europe
According to the latest report of Turkish Statistics Center, it exported $1.7 billion to Iran in the first 10 months of 2020, which is 23 percent less than the same period last year, and its imports from Iran lessened from $3.4 billion to $880 million in the same period.
Eurostat statistics of the European Union’s statistics center show that only €604 million were imported from Iran in the first 10 months of the year. The amount of imports, however, has increased by 6.5 percent compared to the same period last year, but it has decreased significantly, compared to the amount €9 billion in the first 10 months of 2018.
The EU exports to Iran also fell to 17 percent, declined to €3 billion in the first 10 months of this year, compared to the same period in 2018 — less than half.
Iraq, the UAE, and Afghanistan have not released customs reports on their trade with the Islamic Republic in 2020.
Iran’s economy may improve with some short-term tricks like lifting sanctions or releasing the frozen assets but it is not a solution. Nor Iranian people neither neighboring countries or other nations can breathe easily till the Islamic Republic is in power and has money to destabilize the world.
Whether the Biden administration releases the frozen assets or allows Tehran to sell oil the economy will not improve and it will not change people’s livelihoods, because the money will be spent on terrorism.
Due to structural problems and spending national wealth on terrorism rather than Iranian people, Iran’s economy will never be revitalized unless the political and economic structure of Iran changes radically and fundamentally.
The logical solution is not to ransom Mullahs by lifting sanctions or allow them to intimidate other nations by sitting at the negotiation table to feed them.
As a nation-state, a free Iran will preserve peace in the region and will assure security around the world as well as Iranian people will face freedom and democracy. Considering Iran’s geopolitical role in the region, Iran the Great under the ruling by a normal state, not Mullahs will be a comfortable partner enough for both west and the Middle Eastern nations. Regime Change should take place in Iran. Iran’s Economy
Reporting by Sam Cohen, Farshid Modarres, Additional reporting by ICBPS, Editing by Kate Cohen.
Institute of Capacity Building for Political Studies, (ICBPS) publishes articles, analyses, and reports online with no limit. ICBPS has been founded by a group of journalists and activists to provide a great opportunity for those freedom fighters who are being censored by mainstream media.
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