Iran’s President Hassan Rouhani, while knowing very well that the regime’s economy has completely collapsed, claimed that Iran’s economic situation is not in a bad situation and has shrunk by just 3 percent.
A common way to measure the economy of any country is to compare it with countries with similar conditions, in order to show the strengths and weaknesses of the country’s economy and that the economic planners and policymakers have been able to draw a passing plan to address the shortcomings and strengthen the country’s advantages.
Explaining the situation, Rouhani first said: “Before the coronavirus outbreak the country during the government, had faced two serious external shocks, one of which was the fall in oil prices in early 2018 and the second was the harsh US sanctions since 2018.”
He added: “Although the fall in oil prices, and in particular the unprecedented and oppressive US sanctions, also created problems for the people, in the face of these problems, the government managed the country well and, using the experience of successfully dealing with these two shocks, was able to save the country from problems.”
Rouhani finally compared his government’s balance sheet not with similar countries but with industrial countries and claimed: “While the economies of many of the world’s major countries shrank by 20 percent, Iran’s economy suffered only 3 percent in the face of the problems caused by the coronavirus outbreak, a sign of the government’s ability to stand up to and manage this problem.” (Eghtesad Online, 23 August)
The tied economic crises in Iran such as inflation and gigantic liquidity, stagnation of production and unemployment of several million, environmental crisis and lack of drinking water and agriculture, the problem of pension funds and budget deficit and export blockade, falling oil prices and international and regional isolation, capital flight and brain drain, corruption and rent-seeking, etc., have only damaged 3% of the economy?
Adding to this, are the many extreme social crises in Iran the result of just 3 percent damage to the economy?
The Minister of Economic Affairs and Finance’s quarterly review of the economic components can also provide relative insight. Last June, Farhad Dejpsand reported the extent of the country’s economic damage as follows:
“The Coronavirus hurt the country’s (GDP) by 15 percent, and even if oil exports are carried out without sanctions and problems, we will still not have access to all resources. The effects of borrowing from the central bank are harmful, so we are reluctant to accept it. The country’s economic growth last year, including oil, was negative, and to stimulate economic conditions, it is necessary to resort to demand-stimulating policies.” (Khabar Online, 7 June)
On the economic situation Jamaran website on 22 August reported: “The report given by the Research Center says that only in the Iranian economy and only because of the coronavirus, it is predicted that in 2020, we will have a 7.5 to 11 percent decline in GDP. In studies recently published by the Parliamentary Research Center, studies show that only 2.870 million to 6.431 million jobs are expected to be lost in Iran in 2020 because of the coronavirus.
“This shows that the blows that we are getting are due to the negligence that is in the institutional structure infected with rent-seeking, usury, brokerage, and imports are valued more than modern industrial production, and here we pay the price for those damages.
“Unfortunately, in Iran, much worse and more worrying than in developing countries, there is an entanglement and interaction and synergy between the recessionary and inflationary trends. The harms of Iran’s social protection system were also shown in a completely naked way. Fundamental issues in times of crisis need to be taken much more seriously, but what we are seeing now is that the orientations are generally such that we can just pass the days.
An unprecedented and worrying level of short-sightedness and present-seeking can be seen in the decision-making and resource allocation processes.”
Despite the dreams of Hassan Rouhani, the real economic situation of Iran was explained by Eghtesad News on 9 June:
“The average economic growth of the country from 2012 to 2019 has been close to zero percent. According to the International Monetary Fund, in 2020, non-oil economic growth based on non-oil exports will be more than -5 percent. From 2020 onwards, we need at least six years to return to the level of per capita income of 2011.
“The average long-term inflation rate of the Iranian economy has been 20 percent. The country’s per capita income from 2011 to 2019 has faced a steep slope and has experienced a decrease of 34 percent. Given the higher share of food in the spending basket of poorer households, the higher inflation rate of food and beverage in recent years indicates a deterioration in the living conditions of lower-income households than other households. The purchasing power of every Iranian has decreased by about one third compared to 2011.”