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Why the Economy in Iran Will Only Get Worse?

economy in Iran will only get worse

By Staff Writer

The Iranian economy is already in dire straits, but things will only get worse over the coming months, following the US’s decision to pull out of the Iranian nuclear deal and reimpose strict sanctions on the mullahs’ regime.

Currently, the official unemployment rate in Iran is 11.9%, while inflation is at 8.3%. Neither of those statistics is good, but some economics experts have posited that these numbers may be the Iranian Regime’s attempts to cover up an economy in freefall.

On May 8, Steve Hanke, professor of applied economics at Johns Hopkins University, estimated that the actual inflation level in Iran in 71.7%. He also said that the country has the third highest misery index ranking (unemployment plus inflation) in the world.

These already sound terrible, but things will only get worse as the US implements its sanctions against Iran and the rest of the world moves to abide by them, thus cutting Iran off from the majority of the world’s trade.

Foreign Investment

European leaders are currently making moves to safeguard their trade with Iran, but the reality is that the majority of European businesses would rather have access to the American market than the Iranian one. Even if Europe protects its trade, most companies will stop working with Iran to avoid US sanctions.

French energy company Total is currently seeking a waiver from the US in order to develop a gas field in Iran, but has confirmed that if they don’t get it, they will abandon the project.

Sanctions limit the amount of foreign capital entering the country, which will hurt the economy in the short-term, but also in the medium-term, by preventing Iranian industries from modernising.


Iran’s first major setback will be its oil sector, which is a key source of foreign currency. Iran will find it hard to sell Iranian crude on the global market and, according to the DC-based Institute of International Finance, Iranian energy exports will drop by 300,000 barrels a day.

Of course, some countries, like India, China, and Russia, will continue to buy Iranian crude, but they will likely negotiate a much lower price per barrel given the situation that Iran will find itself in.


The US has also moved to increase its non-nuclear sanctions against Iran, by placing sanctions of the governor of the Iranian central bank and one of his deputies for financially supporting the Quds Force (an Iranian suppressive force) and Hezbollah (an Iranian proxy in Lebanon), both of which are designated as terrorist entities by the US Treasury.

Of course, as Simon Constable, a fellow at The Johns Hopkins Institute for Applied Economics, Global Health and the Study of Business Enterprise, wrote on Forbes, this doesn’t mean Iran will stop supporting terrorists, but it will make it more expensive, thereby causing further damage to the Iranian economy.


All of this means that the value of the Iranian rial will continue to fall, meaning inflation will rise and the Iranian people will find it harder to pay for goods and services.

When inflation goes above 100%, as it has done in Venezuela, the value of money will drop by half every 12 months.


In a country under the rule of a religious fascism with no Freedom and Democracy and when people can’t afford to feed their families, protests begin; protests that can spark a revolution and end a regime, as was the case for some countries during the 2011 Arab Spring.

The Iranian Regime has already been rocked by a protest over the lack of basic Freedoms and economy in December 2017 that turned into a nationwide uprising calling for regime change. It’s not hard to see that the people of Iran will rise up again as the situation gets worst.