An Iranian woman walks in a market in Tehran, Iran May 1, 2022.

Dim Economic Outlook Looms Over Iran In Coming Months

Tuesday, 04/16/2024

Iranian commentators and media anticipate a gloomy year ahead for the country’s economy, largely attributing the outlook to government inefficiency and the immense pressure of US sanctions.

Meanwhile, analysts warn that the situation is exacerbated by the government’s apparent lack of a plan to tackle longstanding economic crisis.

Yahya Ebrahimi, a lawmaker from Delfan has said in an interview with Rouydad24 website that that if the situation remains unchanged and the government does not come up with an effective initiative, the US dollar can rise from around 650,000 rials to 1000,000.

He bemoaned the vanishing middle class in Iran, emphasizing that a considerable segment of the population now falls below the official poverty line. He highlighted President Raisi's unfulfilled promise made at the outset of his term in 2021, pledging to safeguard the country's economy from dependence, even on the unlikely prospect of improved relations with Washington. However, Ebrahimi criticized Raisi for failing to uphold this commitment.

Lawmaker Yahya Ebrahimi

According to Ebrahimi, Raisi's assurances regarding economic progress no longer hold weight, given the evident rise in prices, housing costs, and exchange rates, which starkly reflect the economic conditions. He further contended that the actual inflation rate far exceeds the government's reported figure of 40 to 50 percent.

Moreover, Ebrahimi asserted that government mismanagement has inflicted greater harm on the economy than the US sanctions.

Meanwhile, according to a Khabar Online report, housing costs in Iran are poised to escalate further unless the government urgently addresses the housing crisis. The report reveals that the price per square meter of housing units in Tehran surged to 810 million rials (around $1,300) in March 2024, marking a 24.8 percent increase compared to March 2023.

Kianush Goudarzi, Chairman of Tehran's Estate Agents Union, explained to Khabar Online that the spike in housing prices is primarily linked to the surge in exchange rates. Additionally, he noted that given the overall rise in prices across various sectors, an increase in housing costs is expected and natural.

In an article published in Etemad online, former government spokesman Ali Rabei underscored the grim outlook across all sectors, warning of the looming threat of social instability in Iran due to mounting unemployment and poverty. He emphasized, "Unemployment and poverty breed economic insecurity, which in turn fosters social unrest."

Rabei lamented that despite the availability of jobs, the government's low wage policies have left many unemployed individuals disinterested in seeking employment. Moreover, he highlighted the disparity between the government's claims of economic growth and the lack of tangible improvements in people's livelihoods, leaving many questioning the real impact of this purported growth.

According to centrist politician Mansour Haqiqatpour, the problem is that the government has no plan whatsoever to save the country's sinking economy. He added that neither the Raisi administration, nor the parliament have any idea about how to put an end to the ongoing economic crisis.

Conservative politician Ezzatollah Yousefian Molla attributes the surge in prices to government policies, highlighting the detrimental impact of economic instability on businesses. In an interview with Nameh News, he emphasized that restoring public trust in the government is imperative to address ongoing economic challenges.

Yousefian Molla underscored the pervasive uncertainty in the market, particularly regarding fuel prices, which has stymied business confidence. He criticized the government's indecision and inaction, citing the paralysis induced by fluctuating fuel prices as a key factor exacerbating economic instability. Additionally, he pointed out that discussions surrounding potential tax hikes on businesses and individuals further contribute to the prevailing sense of uncertainty.

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