In its latest report the World Bank has reported about “significant” internal and external risks threatening the Iranian economy in the medium term, as well as the high inflation rate and persistent unemployment in the country.
In the section on internal risks, the report refers to the “escalation of social tensions and strikes in the industrial sector” in Iran, emphasizing that the continued internet restrictions by the regime could have long-term detrimental effects on employment and economic activities, especially in the services sector.
Following the nationwide protests in 2022 and the widespread workers’ strikes in recent months, the government, in addition to violently suppressing the protesters, has once again restricted access to the internet and intensified filtering in the country.
According to a report published by NetBlocks, an organization that monitors internet connectivity around the world, after the widespread internet shutdown in Iran, it was revealed that the internet shutdown between September 19 and September 30, 2022, had caused an economic loss of $1.5 million per hour, equivalent to 450 billion Iranian rials, to businesses. This figure is estimated to be around 10 trillion Iranian rials per hour if we take into account the exchange rate of 290,000 rials per dollar at that time.
By this calculation, it can be said that the 11-day internet shutdown and disruption caused 110 trillion rials in losses to the country. At the same time, some reports also indicate that at least 10 million people are engaged in businesses on authorized online platforms.
Meanwhile, the recently published 48-page report on the World Bank’s website indicates that Iran’s economy had a 3.8 percent growth in 2022.
The international institution has also predicted that the growth of gross domestic product will remain limited in the medium term due to ongoing sanctions and insufficient and limited investments.
The issue of drought and severe climate changes in Iran is also among the other issues raised in this report.
According to the World Bank’s assessment, the environmental crisis in the country will lead to detrimental effects on agricultural production, unemployment, and food security, and the “deepening” of this crisis will result in “larger shocks.”
External risks to Iran’s economy include the decline in global oil demand and prices, as well as U.S. sanctions.
Unemployment, Poverty, and High Inflation
Meanwhile, another section of this report addresses the issues of unemployment and poverty, along with the unbridled inflation rate in Iran, stating that inflation in 2022 exceeded 40 percent for the fourth consecutive year and continues to remain high.
According to the World Bank’s assessment, Iran’s inflation rate was 48.7 percent last year, and the significant increase in food prices due to the elimination of subsidies for essential imports and the global rise in food prices has been among the main factors contributing to high inflation in the country.
The report emphasizes that inflation in food prices particularly affects low-income households, as food expenses constitute a significant portion of their expenditures.
Additionally, the disparity between wage growth and the inflation rate has put economic pressure on Iranian households.
The World Bank also highlights that the more than 40 percent devaluation of the Iranian rial in 2022 has been influenced by global inflation, reinforcing inflation expectations and putting further pressure on prices.
The report further states that during the COVID-19 pandemic, one million jobs were lost in Iran, and the number of employed individuals in the country is still 700,000 less than during the peak of the pandemic.
While Iranian authorities have announced a decrease in the unemployment rate in recent months and its transition to single digits, the World Bank states that the main reason for the decline in the unemployment rate in Iran is the “inactivity” of a significant portion of the workforce.
In fact, the active population in search of employment in Iran has been decreasing. The unemployment rate is the ratio of the population actively seeking employment to the employed individuals, which indicates many jobseekers have lost heart and are no longer looking for employment.
Earlier, the Research Center of the regime’s Parliament had stated in a report that many unemployed individuals have become tired of job hunting and have essentially become part of the inactive population, which is why the real unemployment rate is “2.5 times” higher than official government statistics.
According to the World Bank’s assessment, the economic participation rate (individuals who either have a job or are actively seeking one) is at a “weak” level of 40.9 percent, indicating “insufficient job opportunities” in Iran.
The evaluation by this international institution highlights the high rates of inflation, poverty, and unemployment while Sowlat Mortazavi, the regime’s Minister of Labor, claimed on August 20 that a “considerable portion of absolute poverty has been eradicated.”
This claim is made despite the fact that in May of this year, the Research Center of the Iranian Parliament stated in a report that approximately 11 million more people were added to the country’s impoverished population between 2011 and 2021.
