As Iran enters the new Persian year, experts within the regime are sounding alarm bells about the state of the country’s economy.
According to reports, the economic crisis is expected to deepen this year, with little hope for positive change. The worsening economic situation is predicted to be a major contributing factor to potential social unrest, with 80% of the population already living on the brink of poverty. Last year, Iran faced multiple challenges, including an average inflation rate of over 40%, the suspension of negotiations to revive the nuclear deal, months of nationwide protests, a sharp decline in the value of the rial, and mounting tensions with Europe. These factors compounded to exacerbate the existing economic crisis in the country.
Experts are concerned about the value of the rial and warn that previous attempts to fix the problem have resulted in sharp increases in the government’s budget deficit the following year. The lack of investment, particularly in domestic production, is a major concern as it prevents job creation and economic growth. Since 2017, Iran’s infrastructure has been steadily weakening, with no foreign investment coming into the country.
The Iranian regime is hoping to alleviate some of the pressure by re-establishing diplomatic relations with Saudi Arabia, but experts are skeptical that this or similar agreements would lead to a swift improvement in the economy.
Another challenge facing Iran in the coming year is the shortage of financial resources. The regime planned to sell government properties and assets to the private sector, mostly entities controlled by the IRGC, in order to boost financial productivity. However, this strategy has proven to be a disappointment and failure. The regime will need to find new ways to address the financial shortfall if it hopes to avoid further economic hardship in the future.
Last year, severe currency fluctuations caused significant harm to Iran’s economy, and the Central Bank was unable to prevent the increase in the exchange rate. This ongoing process could lead to a crisis in the country’s economy in 2023.
Experts warn that without a clear understanding of monetary policy, the regime risks increasing inflation and further devaluing the national currency.
As Iran enters a new Persian year, the economy remains a critical concern, with little hope for improvement in the short term. Without significant changes in policy and a clear strategy to address the underlying economic issues, Iran’s economy risks further damage, and the potential for social unrest looms large.
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