Iran Economy NewsA Disastrous Decade for Iran’s Economy

A Disastrous Decade for Iran’s Economy

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While President Hassan Rouhani falsely brags about his administration’s accomplishments, statistics show that Iran has experienced a disastrous decade in the economic aspect. Contrary to his claims about reforms, Rouhani refused to reform the flawed budget structure and banking system during his term in office.

In such circumstances, economists described the 2010s as a lost decade in Iran’s fiscal history, which severely affected Iranian families’ livelihood and drove millions of citizens below the poverty line.

“During the 2010s, we came into political and diplomatic field twice, and we defeated the enemy twice. It would not be a mistake to name this decade the decade of victory and national salvation. We were not wrong in saying that this decade was the decade of progress in the country and a leap in production and development. A great and dramatic job was done,” said Rouhani during the inauguration of petrochemical plans on April 15.

In response to Rouhani’s odd remarks, Mohammad Hadi Sobhanian, a Kharazmi University Scientific Board member, described the 2010s as “a lost decade in Iran’s economy.”

“During the 2010s, Iran’s economy experienced ebbs and flows. Therefore, regarding the major economic indicators, we can name the 2010s the lost decade of Iran’s economy,” Sobhanian added.

Official statistics show that the economic growth was averagely near zero in this decade, and society passed high inflation records. In 2019, Iran was among six countries with over-25-percent inflation.

At the time, Iran stood as the sixth state with the highest inflation after Venezuela, Zimbabwe, Argentina, South Sudan, and Sudan. Furthermore, the value of Iran’s national currency rial drastically dropped.

However, this is not the whole story. According to the March 2021 report of the Central Bank of Iran (CBI), the inflation rate has continued while the point-to-point inflation reached 50 percent.

In other words, given the country’s lack of economic growth and an unprecedented increase in the prices of people’s living expenditures, citizens are forced to shrink their product baskets each day.

According to the National Statistic Center, the per capita revenue of households decreased by lower than one-third in the 2010s. Meanwhile, the average consumption of the main foodstuff like rice, chicken, red meat, and fish have declined, and the poverty rate has risen.

Why Has Iran’s Economy Deteriorated?

There are enormous reasons for such circumstances. For instance, several economists believe that liquidity is the main reason for inflation. However, why has liquidity soared? Experts point to the government’s massive budget deficits.

Others reckon the unrestrained printing of banknotes by banks is the main reason. To counter banking disorders and to save their reputation, banks handed printing banknotes uncountably.

And a group of observers pointing to CBI’s wrong decisions as to the central dilemma. They explain that given the shortage in oil income, the government used the CBI’s reserved foreign exchange to compensate for its deficits. In this respect, the government’s debts to the CBI increased.

On the other hand, the majority of people had lost their capability to purchase foreign exchange from the government. Therefore, the government could not offset its costs and benefits. Retail businesses could not import raw materials and equipment. The production cycle did not run. The rial was devaluated more. And the country faced rampant liquidity.

Indeed, unsupported currency led the country’s financial system to the brink of collapse. According to the CBI’s report, the volume of liquidity reached 33.08 quadrillion rial [$1.323 trillion], Eghtesadnews.com reported on March 7.

On the other hand, the government constantly increases the prices of essential goods. No day goes by without major hikes in the prices of sugar, bread, rice, edible oil and other basic items. In a nutshell, officials are adding insult to the injuries of people who have nothing more to lose.

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