Domestic Economy

Runaway Inflation and Government Priorities

Runaway Inflation and Government Priorities
Runaway Inflation and Government Priorities

Iran’s economy has been buffeted by inflationary recession over the past decade. Under the circumstances, conventional anti-inflation policies or anti-recession policies won’t be effective, because resorting to either of them will compound recession and vice versa, Zahra Karimi, an economist, said in an article for the Persian economic daily Donya-e-Eqtesad. A translation of the text follows:
Following the withdrawal of the United States from the Joint Comprehensive Plan of Action, inflation has incessantly hovered around 40% since the fiscal 2018-19 and so containing inflation should take center-stage among the government’s policies. The huge increase in inflation leads to a sharp decline in the purchasing power of people and companies, a serious deviation in relative prices and more uncertainties and risks in the business environment, which inevitably worsens the recession. Therefore, preventing the growth of monetary base and money supply, through strict financial discipline and reducing the budget deficit on the one hand, and applying a contractionary monetary policy and controlling the facilities granted by banks, on the other hand, should be followed by the Central Bank of Iran.  
Despite the importance and necessity of controlling inflation, the intertwined economic and social issues prevent the government from adhering to anti-inflationary policies. At present, many large manufacturing enterprises, including carmakers, are seeing a plunge in production and income, and a significant rise in costs. 


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