The World Bank reduced the economic growth forecast of Iran in 2022 from 3.3% to 2.9% in its latest report. It has also predicted that the country’s economic growth in the next two years will stand at 2.2% and 1.9%, respectively, both lower than previous forecasts.
According to the World Bank, Iran’s inflation rate this year will be 54.8%, which is higher than the previous forecast (51.2%) and the next two years’ inflation will be 44.2% and 39%, Hossein Haqgou, an economic analyst, prefaced his article for the Persian-language daily Ta’adol with this note. A translation of the rest of the text follows:
These discouraging predictions come, as the government of Ebrahim Raisi has promised to register a growth rate of above 5% and inflation rate of less than 40% for this year and an 8% growth and inflation below 20% for the coming years, as per the seventh five-year development plan.
The World Bank predicts that such growth and inflation rates are highly unlikely to come true, given the economy’s structural problems and the government’s misguided policies. These structural issues include climatic challenges and drought, extreme dependence on oil revenues and market fluctuations, budget deficit particularly due to the distribution of untargeted subsidies, the decline in purchasing power of people, international sanctions and economic risks as well as inflation, foreign currency shortages, reduction in investment and unemployment crisis, particularly that of university graduates.
Economic experts have time and again warned about the above-mentioned super challenges in recent years; they have called on the government to carry out structural economic reforms based on a specific and coherent scientific plan.
The latest of such warnings was issued by five prominent economic professors last week. In their open letter, they wrote about “challenges regarding water, soil, desertification and deforestation, extensive air pollution, bankruptcy of pension funds, banking issues and large structural budget deficit, serious political challenges regarding foreign policy which have created countless financial and economic restrictions and the demographic changes of the country over the past four decades. The country’s population is more urban, educated and in the age bracket characterized by effectiveness and having social energy”.
They recommended that “the solution to these problems is not a technical or an administrative process that can be enforced regardless of political and social conditions, and by any government; it requires a highly complicated social and political process. It can be achieved only through compromise and by giving in to the demands of people, some of which may not even be liked by the decision-making system.
If the governing system fails to pay attention to these recommendations and insists on maintaining the status quo or be complacent about trivial changes in the main components of the economy (and not all of them, such as fair distribution of power and respect for individual and social rights), then it will remain out of sync with the realities of the country and the fundamental needs of the people, as well as the gap between the government and the nation.
