TEHRAN, Iran (AP) – Iran’s control over the Strait of Hormuz is declining world energy supply and cause damage global economic distressBut the Islamic Republic’s own economic woes are testing its ability to endure. war and rebel against Washington’s demands.
Iranians are experiencing soaring prices for food, medicine, and other goods. At the same time, the country is seeing massive job losses and business closures due to factors such as: A blow to major industries and months of government internet shutdown.
The economic cost is War and the American naval blockade “This was very substantial and unprecedented for Iran,” said Hadi Kaharzadeh, an Iranian economist and research fellow at Brandeis University.
But Iran endured Decades of economic pressure And sanctions and their ability to adapt have not been dismantled, Kaharzadeh said.
“Iran could probably avoid complete economic collapse and complete shortage of essential goods, but the cost would be very high.” “The main costs will be passed on to ordinary Iranians through higher inflation, increased poverty, reduced services, and tougher daily life.”
The International Monetary Fund predicts that Iran’s economy will shrink by about 6 percentage points next year. Iran’s Official Statistics Center reported in mid-April that the annual inflation rate was 53.7%, and the food inflation rate exceeded 115% compared to the same period last year.
On the other hand, Iran’s real currency Its value has fallen by more than half over the past year, hitting an all-time low of 1.9 million to the dollar at the end of last month. Economic hardship helped fuel mass protests that spread across the country in January.
Rising prices of staple products
Hossein Farmani, 56, was parked under an overpass in central Tehran, idling alongside other taxi drivers waiting for customers. He opened the trunk of his car and took out a kettle, then poured a glass of tea. He reflected on the sharp rise in prices over the past year. Along with items such as milk, the price of tea has also increased by more than 50% since the war began.
“If things continue in this direction, we will suffer even more,” Farmani said.
Prices had already been rising steadily over the past two years, but an Associated Press survey of Tehran’s grocery stores found significant increases since February, before the war began, with chicken and lamb prices up 45%, rice 31% and eggs 60%.
Iranian authorities have announced measures to help Iranians withstand devastating prices. But many of these policies, such as a 60% hike in the minimum wage and voucher programs for essential goods, are fueling inflation, Taimur Rahmani, an economist at the University of Tehran, recently wrote in the leading economic newspaper Duniya-e-Ektesad.
Free bus and subway fares in the capital have also not helped the city’s beleaguered taxi drivers since the war began.
Another driver, Mohammad Deljou, 73, who was waiting nearby, said he was supporting his family of two children on a daily wage of $4. He argued that there was no shortage of products in stores, but rather that the problem was caused by “price gouging.”
“We only buy things that are absolutely necessary, like bread and potatoes. Even eggs have become too expensive for us,” Deljou said. He said prices for tires and other auto parts have increased fivefold in less than a year.
“One price today will be another price tomorrow. How is that possible?” he said.
With job losses, many Iranians are scrambling to find new ways to make money. Ali Asghar Nahardani, 32, said he hasn’t been paid for more than a month by the ride-hailing app where he works. He relied on street vending to cover his living expenses.
“We’re just living day to day and trying to get through this situation as the war continues,” he said.
War contributes to the collapse of Iran’s middle class
The closure of the Straits has increased energy prices around the world. But in Iran, the war marks another step in the destruction of a once large and prosperous middle class after decades of sanctions.
Mohammad Farzanegan, professor of Middle East economics at Marburg University, explained that by 2019, Iran’s middle class had already shrunk to about 55% of the population. He said new sanctions, war, corruption and economic mismanagement have further reduced this number.
The war is likely to push millions of Iranians below the poverty line, according to a report released in late March by the United Nations development agency.
A physical trainer who lives in downtown Tehran said the economic crisis is a mental health crisis in Iranian society. Many of her clients can no longer afford her fees or training sessions, she said. The few clients she left behind started discussing ways to deal with the signs of depression.
“The system is collapsing. Layoffs are happening in factories, businesses, startups, whatever the job is,” she said in a Telegram voice note. She spoke on condition of anonymity due to safety concerns.
Trainor said he has significantly reduced his food intake.
“The last time I bought meat was about two months ago.” She also gave up paying for therapy sessions she started after divorcing her spouse a year ago. “I’m pursuing a master’s degree in psychology, so it’s given me tools to deal with anxiety,” she said.
A resident of Karaj, near the capital, said his insurance company has seen a sharp decline in car and home insurance sales. Families are being dragged into poverty, he said, speaking on condition of anonymity for fear of retaliation.
Karaj residents who took part in large-scale anti-government protests in January blamed “deep systemic corruption” and the Islamic Republic’s expensive aid to armed groups in Lebanon, Yemen and Iraq for the years of anti-government protests.
“Most people condemn the government and its ambitions,” he wrote in a WhatsApp message.
Leaders urge people to be patient
Iranian leaders are trying to intensify the civil war by showing sympathy, while also calling on their people to endure economic pain in order to fight the war.
In a series of messages on his official Telegram channel on Friday, new supreme leader Mojtaba Khamenei described the current stage of the conflict as an “economic battlefield” and called on employers to “avoid layoffs as much as possible.” Khamenei is believed to have been injured in an Israeli attack early in the war and has not yet appeared in public.
Parliament Speaker Mohammad Bagher Qalibaf, who has emerged as a key figure in the war effort and negotiations with the United States, urged Iranians to be “frugal” with their spending. He said on his official Telegram account that government officials and the public have a “duty to help each other” to mitigate the economic impact.
The U.S. blockade has restricted Iran’s vital Gulf trade. Farzanegan estimates that more than 90% of Iran’s trade passes through its southern ports, especially oil exports worth billions of dollars.
Mr Farmani, a taxi driver, said he did not want to accept a “humiliating” peace between the US and Israel.
“A country that has sacrificed so many martyrs and has so many people willing to give their lives cannot afford to allow others around the world to dictate its terms.”
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Rady reported from Cairo. Associated Press writer Nasser Karimi contributed to this report.
