Domestic Economy

Iranian Economist: Tough Times Ahead

The new coronavirus pandemic could shave off 2-3% of Iran's gross domestic product and the economy could lose $20-30 billion due to the virus, with the hardest-hit sector being services
Iranian Economist: Tough Times AheadIranian Economist: Tough Times Ahead

The economic implications of the new coronavirus outbreak in Iran have yet to be precisely gauged, yet it is evident that the economy, already battered by years of punishing sanctions, is facing one of its toughest years in history.
The Iranian New Year holidays have come to an end, but many businesses remain shut as infections from the virus are on the rise. The outbreak is overshadowing almost all aspects of Iran's economy, from production to trade.
Oil price, which has long been a major source of revenue for the Iranian government, is down due to depressed demand and tensions between major producers Russia and Saudi Arabia.
Nonetheless, Saeed Leylaz, university professor and economic analyst, says the decline in oil prices won’t hurt Iran as much as it will impact other petroleum exporting countries.
“Iran is not a consequential exporter of crude oil; we are strong on gas condensate and petrochemical exports rather than crude oil,” he said.
“The decline in oil prices would cause $10-12 million in losses for Iran compared with $200-250 million for Saudi Arabia, which is almost 20 times greater. Iraq will also suffer losses eight to 10 times bigger than Iran.”
Asked about the economic implications of the virus outbreak in Iran, Leylaz said the pandemic could shave off 2-3% of the country’s gross domestic product. 
“I believe Iran’s economy could lose $20-30 billion due to the virus. The hardest hit would be the services sector. The share of retail sales, transportation and industry in the GDP is high; they account for one-fourth of Iran’s economy,” he was quoted as saying by Naft Khabar news agency.
Noting that job holders in services, including tourism, retail, transportation and restaurants, usually come from the lowest social strata and therefore are on the brink of unemployment due to the spread of coronavirus, Leylaz said the virus has acted democratically [in infecting individuals from all classes, the poor as well as the rich], but when it comes to economic consequences, it would harm the poorest and most economically vulnerable members of the public the most. 
“Coronavirus will place enormous strain on people of modest means and the working class, particularly self-employed laborers and non-union workers in urban areas. Exhaustive research must be carried out to help shed light on the degree of the impact coronavirus outbreak will have on people’s livelihoods. So, it is impossible to give an accurate estimate now. No let-up in coronavirus spread by May would bring about profound economic ramifications for the country,” he said.
The Central Bank of Iran has released a list of businesses that have been directly affected by the outbreak of the novel coronavirus disease, COVID-19. These businesses can apply to receive support and facilities from banks.
The list includes food preparation and distribution centers, including restaurants, teahouses and other such centers; tourism centers, including hotels, inns, hostels, road recreation and service centers and other such businesses identified by the Ministry of Industries; air, rail and road transportation whether inter- or intra-city; travel agencies; apparel production and distribution units; bags and footwear production and distribution units; distributors of nuts and dried fruit, confectionaries, ice cream and juice outlets; sport and recreational centers; cultural and educational centers; and handicraft production and distribution centers, ILNA reported.
“Inflation rates are typically the highest during spring in Iran’s economy. Oil exports have hit their rock-bottom level in recent history; exports of dairy products and food have declined drastically; by and large Iran’s non-oil exports have reduced by 20%,” he said.
Leylaz noted that Iran will experience its toughest economic times in the next few months. 
“The government needs to work out an immediate plan, but what is conspicuous is the lack of an integrated voice out there. The post-coronavirus era would definitely be different both socially and economically,” he concluded. 

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