Iran’s Economy with Sanctions!

Iran’s economy is crumbling after years of U.S. sanctions. Both sides have indicated interest in returning to the negotiating table, but neither the U.S. nor Iran wants to give in to the other. Iran signed the nuclear deal — officially known as the Joint Comprehensive Plan of Action (JCPOA) — with the U.S., China, France, Russia, the U.K. and Germany in 2015.

But former U.S. President Donald Trump withdrew from the agreement in 2018 and imposed sanctions under a “maximum pressure” policy to force the regime back to negotiations. Here are six charts from a CNBC report (22 March 2021) that show how Iran’s economy is struggling.

Iran’s economy contracted an estimated 4.99% in 2020, steadily shrinking since 2017. In comparison, the Islamic Republic enjoyed a sharp economic growth of 12.5% in 2016 after the nuclear deal was signed. However, that reprieve was short-lived.

Iran’s GDP was USD360 bil, while Israel was USD480 bil in 2021. We (Malaysia) were at USD373 bil in 2021.

The sanctions lowered Iran’s ability to sell oil and prevented them from repatriating money from energy sales.

Exports and imports both fell sharply after the sanctions were reimposed. Besides oil, Iran’s industrial metals, a large source of the country’s export revenue, were also sanctioned.

Its value on the unofficial market stands at more than 250,000 rials per dollar — that’s far from the central bank’s official rate of 42,000 rials per dollar. A weaker currency makes imports more expensive for locals, and high inflation means the cost of living is rising at a time when the people are already struggling with a weak economy and job market.

High unemployment rates are set to increase even further given Iran’s economic struggles. An estimated 12.4% of the population is expected to be out of work in 2021, according to IMF projections.

Iran’s government is spending beyond its means, and has seen a widening fiscal deficit.

This blog was drafted in response to some of my friends’ concerns about Malaysia’s stance on Palestine and the impact of the Hamas International Financing Prevention Act which was passed by the U.S. House of Representatives recently. We are not sanctioned and hopefully we will not be. If we are, then is it another Iran 2.0?

Reference:

These 6 charts show how sanctions are crushing Iran’s economy, Abigail Ng, CNBC, 22 March 2021