{"id":241575,"date":"2021-06-16T08:17:21","date_gmt":"2021-06-16T13:17:21","guid":{"rendered":"https:\/\/www.ncr-iran.org\/en\/?p=241575"},"modified":"2023-02-08T15:55:25","modified_gmt":"2023-02-08T14:55:25","slug":"the-cause-of-irans-economic-crises-2","status":"publish","type":"post","link":"https:\/\/www.ncr-iran.org\/en\/news\/economy\/the-cause-of-irans-economic-crises-2\/","title":{"rendered":"The Cause of Iran\u2019s Economic Crises"},"content":{"rendered":"<p><img decoding=\"async\" class=\"size-full wp-image-241577 alignnone\" title=\"Iran-economic-crises-NCRI\" src=\"https:\/\/www.ncr-iran.org\/en\/wp-content\/uploads\/2021\/06\/Iran-economic-crises-NCRI.jpg\" alt=\"While many try to downplay Iran's economic crises or blame sanctions for their creation, state-run media acknowledge aspects of these crises.\" width=\"1000\" height=\"578\" srcset=\"https:\/\/www.ncr-iran.org\/en\/wp-content\/uploads\/2021\/06\/Iran-economic-crises-NCRI.jpg 1000w, https:\/\/www.ncr-iran.org\/en\/wp-content\/uploads\/2021\/06\/Iran-economic-crises-NCRI-300x173.jpg 300w, https:\/\/www.ncr-iran.org\/en\/wp-content\/uploads\/2021\/06\/Iran-economic-crises-NCRI-768x444.jpg 768w, https:\/\/www.ncr-iran.org\/en\/wp-content\/uploads\/2021\/06\/Iran-economic-crises-NCRI-150x87.jpg 150w, https:\/\/www.ncr-iran.org\/en\/wp-content\/uploads\/2021\/06\/Iran-economic-crises-NCRI-696x402.jpg 696w\" sizes=\"(max-width: 1000px) 100vw, 1000px\" \/><\/p>\n<p style=\"text-align: justify;\"><span data-contrast=\"auto\">Iran is experiencing its worst economic crisis. While many in the west try to downplay these crises or<a target=\"_blank\" href=\"https:\/\/www.ncr-iran.org\/en\/news\/economy\/iran-state-media-acknowledge-the-cause-of-economic-crises\/\" rel=\"noopener\"> blame sanctions<\/a> for their creation, state-run media acknowledge aspects of these crises. They underline that the regime is behind all of them.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><span data-contrast=\"auto\">\u201cWe have a high rate of underemployment in many areas, and unfortunately, we hear disturbing news. People cannot manage their families with their current employment. Many people have two or three part-time jobs so they could make ends meet,\u201d wrote the state-run Eghtesad-e Pouya on Tuesday, June 15, 2021.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><span data-contrast=\"auto\">Eghtesad Pouya then refers to the regime officials \u201cReferring directly to the unemployment\u201d and concludes that \u201cwe are not in a good economic situation.\u201d<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><span data-contrast=\"auto\">\u201cA large part of countries\u2019 economic growth is due to productivity improvements. Over the past 40 years, about 30 to 40 percent of economic growth in developed Asian countries has come from productivity growth. Meanwhile, Iran had only one percent of economic growth from productivity growth,\u201d Eghtesad-e Pouya adds.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><span data-contrast=\"auto\">According to Eghtesad-e Pouya\u2019s article, \u201cThe lion share of the government and Costly but fruitless protectionist policies are among the most important causes of poor productivity in Iran.\u201d In other words, the regime\u2019s corruption and wasting the national wealth on terrorism and other malign activities have destroyed Iran\u2019s production.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><span data-contrast=\"auto\">\u201cIran\u2019s general economic, political, legal, and social conditions do not provide a favorable environment for economic growth. Economic growth relies on <a target=\"_blank\" href=\"https:\/\/english.mojahedin.org\/i\/iran-poverty-misery-index-20210615\" rel=\"noopener\">investment<\/a>, and the investor needs an atmosphere of trust. Lack of trust in Iran is one of the important obstacles for investment and subsequent economic growth,\u201d Eghtesad-e Pouya concludes.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<h3 style=\"text-align: justify;\"><span data-contrast=\"auto\">Rising liquidity, a cause of Iran\u2019s economic crises<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/h3>\n<p style=\"text-align: justify;\"><span data-contrast=\"auto\">One of Iran\u2019s main economic problems is the high inflation rate and subsequent skyrocketing prices. The reason behind Iran\u2019s increasing inflation is the rampant growth of liquidity.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p style=\"text-align: center;\"><a target=\"_blank\" href=\"https:\/\/stats.sender.net\/forms\/dGYVLa\/view\" rel=\"noopener\"><img decoding=\"async\" class=\"alignnone size-full wp-image-219239\" title=\"Weekly-Signe-up-logo-1\" src=\"https:\/\/www.ncr-iran.org\/en\/wp-content\/uploads\/2021\/09\/Weekly-Signe-up-logo-1.png\" alt=\"Weekly-Signe-up-logo-1\" width=\"250\" height=\"83\" \/><\/a><\/p>\n<p style=\"text-align: justify;\"><span data-contrast=\"auto\">\u201cWhile productive sectors of the economy are being closed due to lack of liquidity, liquidity in non-productive sectors has increased dramatically in recent years. Therefore, inflation has made life bitter for the Iranian people. In other words, the lack of liquidity in the productive sector of the economy and, on the other hand, the entry of huge amounts of money into speculative and destructive activities leads to a cycle of destruction and weakening of the Iranian economy,\u201d the state-run\u00a0Frahikhtegan\u00a0daily acknowledged on June 13.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><span data-contrast=\"auto\">Farhikhtegan\u2019s\u00a0article adds that the recent report of Iran\u2019s Central Bank shows, \u201cThe Amount of liquidity by the end of February 2021 has reached 3.4 quadrillion, which is 40% more than the liquidity of 2.4 quadrillion Tomans in February 2020. The 40% growth of liquidity in 2021 was the most unprecedented in the last five decades.\u201d<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><span data-contrast=\"auto\">The main reason for Iran\u2019s rising liquidity is the regime\u2019s banknote printing for compensating its budget deficit. Hassan Rouhani\u2019s government directly borrowed money from the central bank and sold the government\u2019s foreign exchange earnings to the central bank. Since the Central Bank did not have enough resources to cover the government\u2019s expenses, it started banknote printing. Yet, banknote printing in the modern economy is generally done by commercial banks, and the central bank has a limited role in directly increasing liquidity in society.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><span data-contrast=\"auto\">Farhikhtegan\u00a0daily concludes that \u201cIn our economy, even in years when the growth of the monetary base was low and reasonable, liquidity has increased. The monetary statistics in 2014, in which the growth of the monetary base was 10%, but the growth of liquidity was 31% confirms this fact. Therefore, in the absence of budget deficits or sanctions, what has led to chronic inflation is the banking system.\u201d<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><span data-contrast=\"auto\">As a result, Iranians are grappling with high inflation, skyrocketing prices while they receive low salaries.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><span data-contrast=\"auto\">\u201cMost Iranian households are currently in absolute poverty. Absolute poverty is a severe form of poverty in which individuals are unable to meet the basic needs of themselves and their families, including food, <a target=\"_blank\" href=\"https:\/\/www.ncr-iran.org\/en\/news\/society\/why-is-irans-water-crisis-worsening\/\" rel=\"noopener\">water<\/a>, health, education, and housing,\u201d wrote the state-run Vatan-e\u00a0Emrooz\u00a0on June 13.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><span data-contrast=\"auto\">\u201cCurrently, the level of prosperity of Iranian families has reached its lowest level in decades. There are indications that this downward trend will continue in the future, and even the lifting of sanctions will not provide a way to return to the normal situation,\u201d Vatan-e\u00a0Emrooz\u2019s\u00a0article adds.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><span data-contrast=\"auto\">Due to extreme poverty, there are growing social crises in Iran, such as the rising number of labor children.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><span data-contrast=\"auto\">\u201cThe most important factor in increasing the number of labor children, especially children working on the streets, is poverty. Certainly, with our current economic situation, along with the lack of a vision to address these issues that can alleviate concerns, we will witness more labor children on the streets,\u201d wrote the state-run\u00a0Hamdeli\u00a0daily on June 13.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><span data-contrast=\"auto\">Iran\u2019s social and economic crises and the regime\u2019s role in creating and amplifying them have turned Iranian society into a powder keg. Two <a target=\"_blank\" href=\"https:\/\/www.ncr-iran.org\/en\/iran-protests-2019-update\/\" rel=\"noopener\">major Iran protests<\/a> in 2018 and 2019 that rattled the regime\u2019s foundation started due to the economic crises.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><span data-contrast=\"auto\">\u201cThe last popular protest [in 2019] started due to the fuel price-hike. But officials seem to have forgotten this. The truth is that the consequences of social issues are very much worrying. Yet, officials have not understood the importance of this matter,\u201d\u00a0Hamdeli\u00a0daily warned regime officials.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Iran is experiencing its worst economic crisis. While many in the west try to downplay these crises or blame sanctions for their creation, state-run media acknowledge aspects of these crises. [&#8230;]<\/p>\n","protected":false},"author":19,"featured_media":241577,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[129,194,198,229],"class_list":{"0":"post-241575","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-iran","9":"tag-protests-nov-2019","10":"tag-ncri","11":"tag-irans-economy"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>The Cause of Iran\u2019s Economic Crises - NCRI<\/title>\n<meta name=\"description\" content=\"While many try to downplay Iran&#039;s economic crises or blame sanctions for their creation, state-run media acknowledge aspects of these crises.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ncr-iran.org\/en\/news\/economy\/the-cause-of-irans-economic-crises-2\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Cause of Iran\u2019s Economic Crises - 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