Iran, a country known for its abundant hydrocarbon resources, holds the distinction of being the world’s leading source of such energy. Despite this, the dire situation of the economy has left its people struggling to make ends meet.
In the period spanning from 2005 to 2022, the Iranian regime amassed an astonishing income exceeding $1.67 trillion, a sum that could have propelled the nation toward advanced economic development.
To put the magnitude of this income into perspective, consider that the combined cost of essential commodities such as meat, rice, bread, oil, sugar, clothing, and housing over 16 years amounts to slightly more than $700 billion.
With a $500 billion investment, the state could have created 10 million sustainable jobs, resulting in a complete transformation of its industries, trade, agriculture, and services. These developments would have propelled the Iranian economy to unprecedented heights.
However, the crucial question arises: Where did all this money go? Unfortunately, hundreds of billions of dollars were funneled into the regime’s nuclear and ballistic missile programs and its regional expansion efforts.
These endeavors have absorbed a significant portion of the country’s resources. Moreover, the prevalence of state-level corruption and systemic embezzlement has contributed to the disappearance of funds.
The budget deficit is one of Iran’s main drivers of inflation. The regime faces substantial deficits yearly, resulting in the need to print more banknotes, fueling inflation. This practice perpetuates a vicious cycle that further burdens the Iranian economy.
Inflation has profound negative effects on the economy, particularly in terms of the loss of purchasing power among the population.
Over the past few years, food prices have surged, increasing by at least 10-12 times since 2015. This rise in prices further exacerbates the erosion of people’s ability to afford goods and services, ultimately hindering economic growth.
In October 2020, the state-run newspaper Taadol reported, “Statistics show that Iran is ranked 148th in the world in terms of the business climate index, making it more challenging to be productive compared to 147 other countries.”
Additionally, inflation leads to the devaluation of a country’s currency, which has detrimental consequences for investment prospects.
Moreover, inflation hampers stability within an economy and inhibits economic progress. The volatility created by rising prices undermines confidence in the financial system, making it challenging for businesses and individuals to plan and make informed decisions.
In the case of Iran, inflation has had a significant impact on the country’s economy and infrastructure. Despite periods of high oil revenues, inflation has persisted and continued to rise. This highlights the vulnerability of an economy reliant on a single resource such as crude oil.
During the mullahs’ regime, inflation persisted and rose unchecked, even during periods of high oil revenues. Former President Mahmoud Ahmadinejad’s tenure serves as a notable example of this phenomenon.
Similarly, in the early 1970s, Shah’s economy appeared prosperous due to petrodollars. However, Iran’s heavy inflation dominated its economy starting from 1975 onwards, primarily due to a lack of solid infrastructure and over-dependence on crude oil prices.
According to Professor Steve Hanke, an expert in applied economics at Johns Hopkins University, the inflation rate in Iran reached 95 percent as of January 2023, indicating the significant impact of the regime’s actions on the Iranian people.
However, the regime’s statistics center has not disclosed inflation statistics for some time, and the Central Bank has published data that align with the preferences of Ebrahim Raisi’s administration.
In accordance with the regime’s labor law, the minimum wage should be adjusted to match the official annual inflation rate and adequately support the average household’s cost of living.
Unfortunately, the regime has consistently failed to adhere to Article 41 of the Labor Code. For instance, despite an officially announced inflation rate of 46.5% this year, the Raisi administration only increased the minimum wage by 27%.
The regime justifies this by claiming that raising the minimum wage would further increase inflation.
However, economists within the regime contradict this viewpoint, stating that wage increases in Iran have a minimal inflationary impact. They argue that for every 100% increase in wages, there is a maximum of 3% increase in prices, as observed in studies conducted by the Ministry of Labor.