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Iran’s Economy Teeters on the Edge as Raisi Completes Two Years in Office

Iranians gathered in front of a bourse board

When Ebrahim Raisi took the helm of the executive branch in Iran in 2021, his appointment seemed to focus solely on quelling the potential uprisings aiming to overthrow the regime instead of handling the country’s crumbling economy and the needs a society on the verge of revolt.

Now, after two years, Raisi’s tenure has shed light on the regime’s strategic deadlock. The factions and senior officials who once supported his elevation as president, as well as those whom supreme leader Ali Khamenei sidelined to pave the way for Raisi’s presidency, are now openly criticizing him for his failures. Government experts and media sources alike point out that all of Raisi’s election campaign promises have remained unfulfilled over the past two years and faded into oblivion. His policy of “promise therapy” has only served to complicate matters and worsen the country’s problems, leaving the economy in disarray.

The state-run Baharnews (affiliated with former regime president Mahmoud Ahmadinejad) wrote on August 2, “The story is not just about Raisi’s entanglement in contradictions that lead nowhere; it goes beyond these mere words. The Raisi government is the result of all the claims, slogans, and promises that have been made by the ruling establishment over all these years… They laid brick upon brick, promising that we were heading towards an ideal government, and what was the result? The Raisi government is much ado about nothing!”

One million housing units annually

Ebrahim Raisi’s vow to build one million housing units per year has turned out to be nothing more than a laughable claim. The soaring prices of construction materials, a staggering 300% increase in construction taxes imposed by municipalities, a lack of clear direction in the housing market, and a severe economic recession have all contributed to the failure of this promise. Not only were the one million housing units not built, but even the limited efforts in the housing sector quickly fizzled out due to the weak performance of Raisi’s government. Now, the issue of housing has become a major social challenge with unpredictable consequences.

On July 30, the Javan newspaper, which is affiliated with the Islamic Revolutionary Guard Corps, criticized the government for its inability to deliver on its promise, writing, “The main plan of the thirteenth government was to start building one million housing units per year, which was supposed to be the primary driver of Iran’s 8% economic growth. However, over time, not only did this sector fail to stimulate the economy and create employment in Iran, but the alarming statistics of reduced housing facilities payments in April 2023 and the more than 3.2% decrease in the housing sector’s economic growth indicate a disastrous situation in housing construction in the country. If we don’t seriously consider reforms, the promise of building one million housing units per year will practically become the biggest failure of the thirteenth government.”

Soaring prices

One of the most negative outcomes of President Raisi’s government has been the significant increase in food prices, which has reached at least seven times its initial levels since the beginning of his term. Raisi’s economic policies, often referred to as “economic surgery,” have pushed people’s livelihoods to the brink of a crisis. In the past year alone, the price of red meat has skyrocketed by a staggering 170%. The purchasing power for meat in the country is now lower than in some of the world’s poorest nations, including Rwanda and Mongolia. Per capita meat consumption in the country has dropped by 17% compared to the global average.

The state-run Jomhouri Eslami newspaper, whose editorial staff are politically aligned with factions close to former president Hashemi Rafsanjani, wrote on July 20: “The price of chicken has witnessed an unprecedented spike. Last year, it was priced at 63,000 tomans per kilogram, and after three months, it reached 73,000 tomans. In the past month, it escalated to 100,000 tomans, and according to recent reports, it has now reached an astonishing 120,000 tomans, which is completely inconsistent with the government’s control and pricing system.”

Inflation Control and Economic Growth

Over the past four years, inflation in Iran has exceeded 40%, reaching a level even higher than during the Allied occupation of Iran in 1941. The Raisi government had promised to control inflation and achieve an 8% economic growth in the country. After two years, the promise seems like a mere joke, as it would require an annual investment of 100 billion euros, which hasn’t been realized.

On July 17, the state-run “Tajarat News” wrote about the investment trend in the country, stating, “If we are to achieve the projected 8% economic growth, we must carry out an annual investment of 100 billion euros… However, the claim of attracting such an amount of investment was made while Masoud Khansari, a private sector figure, reported a capital outflow of 45 billion dollars over the past four years.”

Ebrahim Raisi’s track record in managing other crises has been disappointing as well. The country is facing challenges such as water scarcity, environmental issues, an increase in brain drain among talented youth and the skilled work force, pension fund crises, and social unrest. Due to the depletion of strategic reserves and contradicting priorities, the current regime lacks the capacity to effectively respond to these crises.

Nonetheless, the most critical problem this regime confronts is the crisis of legitimacy. Therefore, the Raisi government and the Supreme Leader’s primary focus is on maintaining their grip on power and escalating the suppression of the people. Yet, in the past five years, the courageous youth and resilient people of Iran have demonstrated through their successive uprisings that they will settle for nothing less than the overthrow of this government and will persist in their efforts until they achieve it.