ANALYSISRial’s decline has made profits impossible for small businesses, economist says
Protests by Tehran shopkeepers highlight growing economic strain on small businesses in Iran, economist Ahmad Alavi said in an interview with Iran International.
Profitability has not only declined but has “become impossible” amid the rial’s steep fall, market turmoil, rising taxes, and collapsing consumer purchasing power, Alavi added.
“The decline in purchasing power is transferred directly to shopkeepers and small-scale economic activity,” Alavi said, adding that most Tehran market traders operate as small economic units with limited capital and very low risk tolerance.
He said rial's exchange-rate volatility has made planning impossible for importers, merchants, and small sellers.
“Planning, which is the basis of profitability and stability, disappears when the currency market is chaotic,” he said.
Alavi said rising direct and indirect taxes have added pressure on small business owners while weakening consumer demand further reduces sales.
He added that many shopkeepers have cut working hours and laid off employees or apprentices in order to continue operating, as inflation accelerates and purchasing power falls.
