Iran Economy NewsIran Is on the Path to Becoming a Forever...

Iran Is on the Path to Becoming a Forever Poor Country

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Experience shows that the group of countries in the world whose inability to use their assets due to poor productivity and inefficiency in domestic economic policies, as well as an inability to speed up foreign trade and interaction with the world, are ready to sink into perpetual poverty.

Unfortunately, signs of all three of the above factors can be seen in the Iranian economy from 2011 up to now, especially in the context of growing poverty and the number of poor people.

The latest studies by Iran’s Ministry of Welfare show that in the last decade, a significant part of the country’s households has been trapped in poverty. According to published data, the poverty rate rose from 22 percent in 2017 to 32 percent (the highest rate in 10 years) in 2019, meaning that in 2019, about 32 percent of the country’s population, or 26.5 million people, were living below the poverty line.

High inflation rates, especially since 2018, the recession, and the steady decline in per capita national income have caused Iranian households to face declining welfare every year for the past 10 years. The poverty rate in 2020 was 31 percent, which in this case, considering the population of more than 83 million people, we can say that 31 percent of the population, i.e., about 26 million people were below the poverty line last year.

Studies show that the poverty situation has worsened in 2020, so that the estimated average poverty line in Iran last year was 1.254000 million tomans per capita, based on which the poverty line of a family of three and four was 2.758000 million and 3.385000 million tomans, respectively.

Among the various commodity groups, the share of food and housing in the expenditures of the poor households is more prominent, and therefore high inflation in these commodities is the main reason for the increase in poverty last year.

Since the cost of providing a basket is a criterion for determining the poverty line, the increase in the poverty line indicates that the poor household must pay much higher costs to provide a fixed minimum; This is while, firstly, incomes have not increased to this extent, and secondly, if incomes increase, the share of low-income households may be less than this increase, or even despite the increase.

In fact, the resulting price shock, regardless of the effect of substitution and poorer household consumption, is likely to reduce consumption for many households in the short term.

Therefore, with the sharp increase in the poverty line last year, it can be said that due to the lack of a proportional increase in income and lack of high economic growth, more likely, more households will fall below the poverty line and we will see an increase in poverty this year.

Iran has lost the ability to use its most liquid asset, oil, since the start of the expansion of its nuclear projects after the US imposed sanctions on Iran’s economy.

On the other hand, Iran’s valuable human resources, which are the main assets of Iran, have also fallen into the trap of unemployment, and the lack of sufficient domestic and foreign investment squanders the best working period of the Iranian youth.

While Iran no longer has a chance to return to a normal life cycle and a wholesome relation with the world because of long years of government corruption and resources wastes even by fundamental changes, adding to this the waste of human resources which for every country is the most valuable and unreplaceable resource, it will fall among the forever poor countries.

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