Candidates in the Iranian presidential elections scheduled for next Friday have pledged to revive the faltering economy, but voters see little hope that cost-of-living pressures will ease without the end of sanctions and a reduction in the international isolation that Iran suffers from.
Iranians are waging a daily battle to make ends meet, a constant challenge for Iran’s rulers who fear sparking protests that erupt from time to time by low- and middle-income groups angry about ongoing hardships.
The re-imposition of US sanctions in 2018 hurt Iran’s oil exports, reducing the state’s revenues and forcing it to take unpopular steps, such as increasing taxes, and running a large budget deficit in policies that kept annual inflation near 40%.
Although the country has avoided complete economic collapse, primarily supported by oil exports to China and rising crude prices, oil export levels remain lower than before 2018.
Most of the candidates seeking to succeed Ibrahim Raisi, after his death in a helicopter crash last month, say they intend to emulate his policy, which was based on economic self-reliance and strengthening trade relations with Asia, and others advocate broader relations with the world without presenting a vision of practical steps. To address sanctions.
During the 3 years that Raisi spent in power, the Iranian economy caught its breath from a recession in 2018 and 2019 resulting from the re-imposition of sanctions, and growth reached its peak at 5.7% in the year ending last March, according to the Iranian Statistical Center.
However, most of this expansion has been driven by the energy sector, with Iran recording a 70% jump in oil production, which now stands at about 3.5 million barrels per day, with oil exports exceeding 1.4 million barrels per day and directed primarily to China.
Iranian Customs Chief Mohammad Rezvanifar says that without oil and gas, growth in Iran last year would have been only 3.4%, and its trade balance would have recorded a deficit of $16.8 billion. The United Nations Conference on Trade and Development (UNCTAD) also says that foreign direct investment in Iran has stopped at $1.5 billion in 2022.
Purchasing power
Iran’s unemployment rate is about 7.6%, according to the World Bank, compared to about 9.6% when Raisi was elected. However, the salaries of many formal jobs are poor, meaning that the real number of people without suitable work that provides a livelihood is probably higher. Much.
“It’s not hard to understand why most Iranians are angry,” said Javad Salehi, an economics professor at Virginia Polytechnic University and Institute of Isfahan. “Living standards may have improved and poverty has decreased in the past two years, but that’s not true if we look at a decade or two in the future. The new president can inject hope and stop the deterioration, but he won’t take Iran back to the first decade of the 21st century,” he said, referring to a more prosperous era.
The purchasing power of Iranians continued to shrink during Raisi’s presidency, as the value of the Iranian rial in free circulation fell by more than half, according to the Iranian currency tracking website Bonbast, and now recorded 600,000 Iranian rials against the dollar.
The prices of basic commodities, such as dairy, rice and meat, have risen in the past few months, and the subsidized price of loach bread, which is the most popular bread, has increased by no less than 230% in the past three years, while red meat has become very expensive for many, as its price has risen. 440% to $10 per kilogram.
A teacher’s monthly salary is about $180, and many construction workers earn just over $10 a day.
Candidates promised to implement the country’s seventh development plan, approved by Parliament last year, which aims to curb inflation, boost exports and sets ambitious targets for achieving 8% annual growth under sanctions.
But the World Bank’s forecasts for the next three years indicate annual growth rates of less than 3.2% for Iran as a result of declining global demand, sanctions, and domestic energy shortages.
Reuters quoted voters as saying that the state of the economy is linked to the country’s staunchly anti-Western diplomatic position, which the Supreme Leader sets on Khamenei, the country’s final decision-maker.
During his three years in office, Raisi, a Khamenei loyalist, pledged not to link the economy to nuclear negotiations with world powers, even though the talks could have lifted most US restrictions by reviving the 2015 agreement limiting Tehran’s nuclear programme.
Policy continuity
An administrator at Rudhan University in Tehran province, named Muhammad, said, “The economy has been greatly affected by foreign policy. There is no successful strategy to limit the devastating effects of sanctions.” Like other voters interviewed, he did not want to give his full name due to the sensitivity of the election issue.
The early elections gave the candidates little time to develop detailed economic plans, and most of them said that the economy must become more self-reliant before Iran tried to end the sanctions imposed on it, while the centrist Masoud Pezeshkian and the ultra-conservative cleric Mostafa Pourmohammadi were more blunt. On the need for open relations to help the economy.
The election debates focused mainly on financial imbalances, mismanagement of resources and graft, internal issues that many Iranians believe are deeply rooted in the country and difficult to fix.
“As long as government policies do not effectively support competition, transparency and investment security, things will get worse,” said Peyman, a civil engineer from Tehran.
The head of Iran’s National Development Fund, Mehdi Ghazanfari, told official media that the absence of developed political parties means that election candidates have not determined future ministers or policies in advance, and the winner usually rushes to appoint a government that “is ultimately inconsistent.”
Analysts believe that Iran’s economic outlook appears more uncertain than ever, with the possibility of more stringent implementation of sanctions targeting oil if Donald Trump wins the presidency of the United States again, according to what former Foreign Minister Mohammad Javad Zarif said during his support for Pezeshkian’s campaign.
