The re-imposition of US sanctions on Tehran, the shortage of financial resources, the difficulty of securing and supplying basic commodities, rising commodity and product prices, the flight of investments and investors from Iran, the rise in foreign exchange rates against the local currency and the accompanied rise in prices and high rate inflation, in addition to the crises and problems that continue to exist throughout 2018 from its previous year, all the above will cast a negative shadow on the political and economic situation of Iran and the living condition of Iranian citizens in 2019.
All indicators in Iran, especially the economic growth index, tell that the situation is getting worse and the government was and still being unable to find solutions to its crises, especially since Iran’s economic growth index will be very disastrous in 2019 as the World Bank stressed that economic growth for Iran this year will be -3.6%. According to experts, such level of an economic growth of a country with a population of 82 million means that a comprehensive collapse awaits the country unless there is a comprehensive change in its policies leading to the removal of all or some of the reasons that led to these situations at the very beginning.
IMF researchers also predicted the same growth rate for the Iranian economy this year, but the Research Center of the Iranian Shura Council seems to be more pessimistic than these two international institutions on the future of the country’s economy, which indicates that these two institutions have relied in their estimates on the best conditions and optimal expectations, in addition to being far from the reality of the Iranian situation. The estimates of the above Research Center have given more negative signals to the situation in Iran in the new year. It predicted that Iran’s economic growth rate would be between -4.5% and -5.5%, which would increase crises and problems and put Iran at the most dangerous and complex stage of its entire history.
However, according to many studies, most of which are Iranian, the situation in Iran in 2019, especially in the fourth quarter, will reach the point of explosion, and the economy will continue to decline to the point that the growth reaches -20%. Such figure would often mean a comprehensive economic collapse in the country. This rate will inevitably lead to a sudden rise in unemployment rates of as much as 70%. Productive sectors will also witness a complete paralysis, with steep inflation, high prices and the country entering chaos that will lead to a mass uprising. However, the prospective reactions of the Iranian regime and its pre-emptive actions to thwart any revolution are the most dangerous move to expect to Iran as well as the region, such as starting war to extinguish internal fire or spreading terrorist groups inside Iran to threaten the people and suppress any revolution under the guise of fighting terrorism!
Iran’s budget for this year, with its unclear details and ambiguous figures, is one of the most negative indicators of the economic situation in Iran, especially as it depends mainly on oil resources. While Iran was selling 2.3 million barrels a day, this number decreased today to reach 1.6 million barrels per day, and after the end of the period given by the United States to some countries to stop the purchase of Iranian oil, it is certain that Iran would lose its sources of income from the sale of oil , which will bear the next year’s budget to further deficit, which may reach to the extent that the government will not be able to pay the salaries of government, military and security institutions, knowing that the tax revenues in Iran is very selective, and due to tax evasion and corruption in the Iranian customs system, these returns will not be able to cover even 50% of the Government salaries.
Therefore, it can be said that Rouhani’s budget which was sent first to the Shura Council and then to the supreme leader Ali Khamenei to put some amendments on it before being discussed once again and approved by the Shura Council, is a formality and its goal is propagandist aiming at giving an image of Iran stable and strong. Despite the reduction of the budget of some institutions, and their reliance on uncertain future i.e. the sale of oil, this budget cannot be but a very fake and unrealistic one.
Al Mezmaah Studies & Research Centre
January 3, 2019