Iranian Economy on Verge of Collapse Because of Coronavirus

The Foreign Policy magazine issued a report, describing the possibility of a total collapse of the Iranian economy if the country will have to challenge another wave of the coronavirus.

The World Bank statistics on global economic growth have suggested that the level of deflation in the Iranian economy will reach 10 percent, compared to the past two years, amid expectations of an increase in the recession rates after the Corona crisis.

Destructive wave and exhausted economy

The Iranian economy’s struggle became obvious when the government announced easing the lockdown measures during the climax of the virus outbreak, “Why did Hassan Rouhani end the lockdown in Iran?” Foreign Policy is asking, referring that with this step, the Iranian regime would be prioritizing the economy, lost about 15 % due to the lockdown measures.

In light of decline in the oil revenues, the equation between economy and health is affected by other factors, particularly the alternative lifelines of the local economy, such as tourism and trade. The US magazine is saying that the main reason behind ending the lockdown would be the deterioration in the above mentioned lifelines, pointing out that Iranian decision-makers fear not being able to handle more losses in those sectors, proving that the decision of easing the measures in Iran would be linked to economic factors and not to overcoming the corona crisis.

A few days ago, the Iranian Ministry of Health announced that the total number of infections in Iran has exceeded 100,000, with a remarkable increase in the rate of new infections this week. Meanwhile the ministry’s spokesperson, Takyanoush Jahanbur, indicated that the number of deaths reached 6,418 cases.

Tourism and pains of snapping the fingers

Tourism in Iran, the religious in particular, was one of the factors forcing the Iranian government to scream in the game of snapping the fingers between Iran and Western countries on economic level.

“During the past three months, tourism in Iran lost about $200 million, which caused a catastrophe for the local economy in light of the continued US sanctions on the oil sector,” the Iranian Deputy Minister of Tourism, Valley Temury, says.

Due to the coronavirus outbreak, Iranian government had previously announced closing the religious shrines that considered as the lifeline of tourism in the country. However, President Hassan Rouhani recently announced a gradual reopening of some shrines.

Among the institutions affected by the crisis is the Iranian Airlines Association, estimating the rate of decrease in domestic flights by 90 % compared to the situation before the crisis. “Three airlines have already closed since the start of the crisis, and if the measures taken against the epidemic will continue, the airlines will lose about $200 million and will be obliged to reduce the number of employees,” the association explains.

Unemployment and Hunger Revolution

Apart from the government and private companies’ economy, Iranian citizens are the most affected by the crisis.

In this context, an adviser to the Iranian Supreme Labor Council talks about a three-dimensional crisis that hit the Iranians: the first dimension of which is the rise in prices of the basic needs and food items, while the second is the unprecedented rise in unemployment rates, while the third is reducing the wages for those who are still working.

According to the Labor Council statistics, families spend one third of their income on food due to the rise in food prices, semi-official reports estimate the number of people unemployed because of the coronavirus at nearly one million.

Mohsen Sezigara, an Iranian opposition member, is expecting a hunger revolution in Iran, which might surprise the regime and outpace its ability to suppress it, indicating that government would have to commits grave mistakes in handling the crisis of the coronavirus.

Several Iranian news agencies have previously quoted Iranian officials by saying that Iran’s economy is struggling because of the coronavirus as well as the economic sanctions imposed on Iran and that the unemployment rate might rise to 5 million.

Shocking numbers

The enormous losses resulted due to the corona crisis force experts, in one way or another, to compare them with the effects of the US sanctions imposed on the Iranian regime. Brian Hook, the US special envoy to Iran, explains that the losses caused by the sanctions imposed by Washington after withdrawing from the nuclear deal would be estimated at $ 50 billion until the beginning of this year, while the International Monetary Fund is estimating last year’s downturn in the Iranian economy by 9.5 %.

The effects of the US sanctions are also seen on the local currency, as the Central Bank of Iran estimates the annual rate of inflation at 41 %, the highest level in 25 years, whereas the Iranian riyal has lost more than 50 % of its value.

The Iranian government has already asked the United States to lift sanctions against it, to combat the coronavirus outbreak, a request that Washington refused, expressing its willingness to provide health services and medical supplies to Iran.

As for the effects of the corona crisis, the Iranian Parliament Research Center says the economic crisis is getting worse in all vital fields, amid expectations that inflation could be rising by 25 %, and a crisis in supplying citizens with their basic need could occur.

The center also warns that the effects of the corona crisis could lead to a further decline in the resources of hard currency, apart from the financial burden imposed on pension funds and high unemployment rates.

All publishing rights and copyrights reserved to MENA Research and Study Center