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'[US] President [Donald] Trump is expecting a call from Iran. He believes that Iran’s economy is collapsing, and this will eventually force Iran to ask for a new deal instead of attempting to keep the JCPOA alive,' wrote Arash Pourebrahimi in the article 'Is Iran's Economy Collapsing?' published in Belfer Center on Tuesday.
'Apparently, some officials in the White House are hoping that bringing Iran's economy on its knees will leave Iranians no choice, but to surrender and to accept whatever the US wants—including secretary Pompeo’s long list of twelve demands. But these expectations might not come true. Iran’s economy is having difficulties for sure, but is far from “collapsing”.'
Pourebrahimi wrote, 'While the Iranian Rial has lost more than 50 percent of its value against the US dollar in the unofficial market since January 2018, this is nothing new for Iran’s economy. Every president since the end of Iran-Iraq war had to deal with a sort of analogous currency crisis.'
Referring to President Trump's remarks claiming that the inflation rate in Iran is not “going through the roof', he wrote, 'On the contrary, it is experiencing historically low levels. The annual inflation rate has been in the single digits for two consecutive years which is unprecedented since the 1979 revolution according to the Central Bank of Iran (CBI).'
'The most recent available inflation rate is 10.2 percent (July 2018) and it will increase as the result of recent currency depreciations, according to the estimation published by the Iranian Parliament Research Center. However, with an average inflation rate of 19 percent since the 1979 revolution, dealing with inflation in Iran is worrisome but not new. Economic variables, such as growth, are not very insightful since they have not been updated during the last quarter.'
Pourebrahimi wrote that most recent numbers published by the CBI show a 3.7 percent growth. Unemployment rate fell to 12.1 percent in spring 2018 from 12.6 percent in spring 2017 (youth unemployment fell from 28.8 to 28.3 percent in a similar time period) according to the Statistical Center of Iran.
'Other recently updated variables do not indicate a collapsing economy either. The index of the Tehran Stock Exchange increased around 30 percent during the last three months (as of August 2nd, 2018). Of course, it should be noted that “the stock market is not the economy” and stock market capitalization to GDP for Iran is only 35 percent, but still the stock market is not depicting an economy in free fall.'
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