Due to massive government meddling, Iran’s economy has been on the verge of collapse for years. An economy that has nearly collapsed due to the regime’s corruption, and now, 43 years later, all signs are painting a bleak picture, with stagflation being just one of the consequences.

The stagflation in Iran has worsened since 2018

One of the primary drawbacks of this economy is its slow GDP growth. According to data from Iran’s Statistics Center, the country’s GDP growth has averaged negative, zero, or one percent for the last 20 years.

Furthermore, according to statistics from this organization, Iran’s average inflation rate for the last 20 years has been 20%. Stagflation is defined as negative economic growth combined with double-digit inflation.

As per experts, stagflation eats away at the foundations of production like termites and sends vast quantities of liquidity to intermediation. The stagflation in Iran has worsened since 2018 when sanctions coincided with mismanagement and government corruption, and the rate of each dollar rose from 5,000 to 19,000 tomans, then to 33,000 tomans. In less than a year, at least $30 billion in foreign exchange from the production sector entered brokerage and intermediation activities.

 

 

The three main economic sectors all saw negative growth

Any economy’s survival is contingent on the production, service, and agriculture sectors performing well and consistently. The flow of liquidity in these three sectors, as well as a positive trade balance, are both necessary for any economy to grow; however, all of these sectors in Iran have become dysfunctional as a result of the expansion of unproductive activities, brokerage, and stagflation, and have not shown a normal trend in recent years.

Iran’s external trade balance, for example, was negative and fluctuated between $3 billion and $10 billion each year on average, and the three main economic sectors all saw negative growth.

The Iranian government’s ineffective and disproportionate responses to the current crisis have increased the danger of investing in the manufacturing and services sectors to the point where many economic actors decide to shift their liquidity from producing to intermediation activities.

 

 

Ali Khamenei has put punishing sanctions on Iran

Currency trading, gold, real estate, and automobiles are examples of unproductive businesses that not only contribute little to the economy but also fuel inflation.

The major source of Iran’s economic troubles, however, must be found in the nature of the country’s reactionary leadership. The government’s approach to both internal and foreign concerns reinforces challenges. For example,

with at least $10 billion in money leaving the nation each year due to macroeconomic indicators that are unstable.

The government has not only ruined the country’s production but also deteriorated social and moral standards by creating the appropriate conditions for intermediation. It’s as though intermediation has become a guiding principle in the regime’s economic system.

 

lack of clarity and deepening of low economic growth

Evidence that brokers are more respected, but neither producer nor artisan is pleased with the government’s response, is due to the government’s unexpected decisions and the enactment of new laws, which means none of them can prepare for the medium and short term.

This suggests that economic actors’ lack of clarity adds to the deepening of low economic growth and stagflation.

In these circumstances, it is reasonable to expect the country’s GDP to remain negative if not zero. Of course, the regime’s Statistics Center’s statistics manipulation must be ignored.

Because, according to this institution, Iran’s economy l, despite the fact that the country’s real inflation rate is over 60%, and at least 60 million Iranians are facing a humanitarian crisis.

 

 

 

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