Iranian Chamber of Commerce chief warns of 57% drop in GDP

Gholam-Hossein Shafei, president of the Iranian Chamber of Commerce, warned that the government must remove “national and international obstacles to production” in the face of a 57% drop in GDP, and revise economic policies to boost economic growth. competition and create a favorable environment. environment conducive to investment.

Speaking at a meeting of chambers of commerce in Mashhad, Shafei cited World Bank figures based on the exchange rates of the current dollar to the rial showing that Iran’s gross domestic product (GDP) had grown from $ 445 billion in 2017 to $ 192 billion in 2020.

The bank’s calculations using the official exchange rate give a GDP of $ 628 billion for the Iranian year 2020/21, with GDP growth of 1.7% after two years in which the economy has shrunk. contracted by 12%. However, the official exchange rate is misleading as most imports and prices are determined by the market exchange rate, showing that the Iranian currency has increased nine-fold in four years and reveals the true extent of the decline in its GDP.

Shafei said the successful lifting of US sanctions would be “one of the biggest tests” of President Ebrahim Raisi (Raeesi) government. In his Mashhad speech, he said the statistics he cited were “stern warnings for the future of Iran’s economy and underscored the need to revise current policies.” He argued that the government should promote market competition as a way to increase tax revenues and reduce a budget deficit that fueled inflation.

Iran came under “maximum pressure” sanctions from the United States when President Donald Trump withdrew in 2018 from Iran’s 2015 nuclear deal with world powers, the JCPOA (Comprehensive Plan of Action spouse), cutting off its main source of hard currency through oil exports. In June 2020, Vice President Es’hagh Jahangiri said that revenues from crude oil exports – $ 60.2 billion in 2018, according to OPEC figures – were around $ 8 billion per year. .

Iran’s decline in economic fortunes is linked to both ten years of international and US sanctions, as well as its inefficient and centralized economic system plagued by political patronage and corruption.

Iran’s economic woes and increasing poverty have led to widespread protests since late 2017. In August, the Ministry of Labor reported that poverty had increased by 38% between March 2019 and March 2020, with around one third of Iranians below the poverty line defined as an income of 25 million rials per month ($ 200 at the time). According to World Bank figures, GDP per capita increased from $ 14,538 in 2017 to $ 12,433 in 2020, but again this was calculated based on official exchange rates, which is misleading in the assessment of the real price increase.

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