Majlis Research Center: Iran’s Economy in Freefall and Reaching Destruction
Economic Crisis in Iran
The Iranian regime’s economy is in a freefall and reaching the point of complete destruction.
The regime’s wasting of the national wealth and plundering people’s assets to fund its warmongering and terrorism machine, nuclear activities, and the Revolutionary Guards (IRGC) has resulted in an economic catastrophe. In addition, the regime’s institutionalized, systematic, and widespread corruption has increased the economic hardships in Iran. In such a case, the coronavirus crisis has caused unemployment for millions of Iranians and increased economic problems.
The Research Center of the Iranian regime’s parliament has prepared a report on the country’s economic situation. During its session on May 31, the new parliament of the mullahs was presented the report by Mohammad Ghasemi, the head of the center. The report is titled “Image of the country’s economic situation: Challenges and Strategies.” Its release was also widely covered by state media.
The report, which covers the economic situation during Hassan Rouhani’s two terms in office, reports a sharp decline in people’s living standards in the 2010s. A direct presentation of a summary of the report by the head of the Majles Research Center and its extensive coverage on state-run websites affiliated with Khamenei’s fraction shows that the conflict between the IRGC Brigadier General Mohammad Baqer Qalibaf, the new speaker of parliament, and President Hassan Rouhani is escalating.
According to the state-run IRNA news agency, on May 31, Mohammad Ghasemi, head of the Parliamentary Research Center, referred to Iran’s dire economic situation, including the spread of poverty in the country and called it an economic policy turmoil. “And it’s not even clear who should be accountable to parliament for the business system or the banking system. … The confusion of domestic politics has confused foreign policy and strengthened short-term views,” he said.
There is no doubt that this is part of the regime’s infightings over more share of power, which seeks to take advantage of the dire economic situation and blame Hassan Rouhani’s government. But what cannot be hidden, even according to this report, is the current state of Iran’s economic decline, which is not only due to of Rouhani government‘s bankruptcy and corruption, but also because of all corrupt organizations and institutions of the regime from the office of Supreme Leader Ali Khamenei with more than $200 billion in wealth, to the members of the regime’s parliament and its judiciary, and the corrupt mafia of the IRGC terrorists who have infiltrated all aspects of Iran’s economy and who are plundering the assets of the Iranian people.
Experts at the Center for Research, or the legislature’s think tank, have relied on statistics from the regime’s official sources to report that they have naturally tried to make parts of the country’s macroeconomic data better, including in areas such as unemployment and inflation. However, if we use the same official statistics, which do not state all the facts, we will reach miserable results.
Unprecedented causes of Iran’s economic collapse
– Falling GDP: The first factor in the country’s economic decline is the fall in the national GDP. In straightforward terms, the gross domestic product is the total value of goods and services produced in a country over one year.
– Rising inflation: Severe inflationary tensions are the second cause of the country’s sinking into the black hole of poverty. The 41 years of religious dictatorship in Iran has been completely spent with inflation, and even according to official sources, the average inflation rate in the last four decades has been 20 percent, while the average inflation rate in the world has fluctuated at around 3 to 4 percent.
According to the Parliamentary Research Center, Iran has the fourth-highest inflation rate after Venezuela, Zimbabwe, and Argentina. One of the most important factors in the continuation of high inflation in Iran is the peak of liquidity, the volume of which has recently reached over 2500 thousand billion tomans (10 thousand times more than what it was in 1979), while the volume of national production at current prices has increased only five times.
In 2019, liquidity growth reached over 31 percent, while GDP fell by about 7.5 percent. This is the primary source of the collapse of the national currency and the people’s purchasing power as well as the dramatic fall in the exchange rate of the rial against foreign currencies.
Increase in the absolute poverty of the Iranian people
The most important result of the fall in the rate of economic growth and the continuation of very high inflation is the spread of absolute poverty in Iranian society.
In examining the inflationary recession in the Iranian economy, the role of economic sanctions such as sanctions on the regime’s oil export and the banking system should be considered. These sanctions have been imposed mainly because of the regime’s illicit activities. Whenever the regime renounces regional tensions, such as supporting terrorist proxy groups or trying to acquire nuclear weapons and producing and testing ballistic missiles, these sanctions would also be lifted.
On June 4, 2020, the state-run Eqtesad News website reported: According to the Majlis Research Center, the poverty line of four-person households in Tehran has increased from 2.5 million tomans to 4.5 million tomans in the last two years, which means that the inflation rate has increased by 80%, and this inflation rate has led to significant growth in the poverty line in Tehran and other parts of the country. This, along with a significant reduction of general income, has led to an increase in the poverty rate over the years, and the available evidence suggests that this variable is increasing in 2019 and 2020.
With the poverty line at such levels, many employees and retirees, and even small business owners, are under the absolute poverty line.
The Parliamentary Research Center also reports that despite the increase in the nominal income of Iranian households between 2011 and 2019, the average purchasing power of each Iranian has decreased by about one-third during this period. In other words, if Iran’s total national income in 2019 is evenly distributed among the country’s population, the purchasing power of each Iranian will be 34% lower than in the first decade of 2010.
The country’s dire economic situation and all kinds of severe crises result from widespread corruption and the rule of the religious dictatorship. Solving Iran’s economic problems and achieving economic growth can only be achieved through regime change and the establishment of freedom and democracy. This will lead to the real participation of the people in the country’s economy and the necessary stability for significant investments.
As Mrs. Maryam Rajavi, the President-elect of the National Council of Resistance of Iran (NCRI), has said: All the promises by the mullahs to the deprived and calamity-stricken people of Iran are hollow and worthless. The only way to end poverty, destitution, and unemployment is to end the mullahs’ evil dictatorship and establish freedom and people’s sovereignty.