Iran’s Eroding Economy

July 8, 2012 in Daily Bulletin

Thomas Erdbrink took a look at Iran’s rapidly declining economy:

  • Iran’s currency last lost 50% of its value compared to other currencies in the past year.
  • This has caused runaway inflation – the government estimates it at 25%, while economists say it’s much higher.
  • Iranians now live by speculation, not by production. They convert their money into American dollars and watch it rise in value, or use the money to buy land and cars.
  • Meanwhile the value of people’s savings erode overnight.
  • Oil sanctions are a part of the reason for the economy’s failing state.
  • However policies pursued by the government have also contributed to the problem. The government used oil revenues to ramp up imports, putting domestic producers out of business.
  • State subsidies for food and gas have also encouraged over-consumption and hurt the economy.

To read more including why factory-owners are now seen as losers in Iran, how those employed by the state have been faring, why Iran’s economy is like a casino, the role that Ahmadinejad played, what the sophisticated Iranian investors are doing, why shuttering domestic production was bad for Iran, and what Iranians have to say about it, click here.

Source: New York Times