Iran’s economy grew by 3.6% in the 2020/2021 Persian calendar year (ended March 20), Akbar Komijani, lately appointed caretaker governor at the Central Bank of Iran (CBI), was cited as saying by Press TV.
If verified, it would mean Iran has emerged from the long and bitter three-year recession that set in around May 2018 when former US president Donald Trump hit Tehran with renewed and intensified heavy sanctions.
Komijani was also reported as stating that Iranian GDP expanded in the Persian year fourth quarter by 7.7%. That was said to have followed two successive quarters of growth beginning late July 2020. Officials have credited higher exports and a general realignment of the economy, necessitated by the impact of heavy US sanctions, with securing the new growth.
Trump’s sanctions drive against Iran kicked in halfway through 2018, a year that brought a GDP contraction of 6%, according to the World Bank. Things worsened in 2019 as the sanctions screw was tightened, with economic output falling 6.8%.
The Iranian currency has recovered since the Trump presidency but remains volatile. The Iranian rial (IRR) on May 5 reached its strongest rate against the dollar on the open market in three months, causing the central bank to deny it was boosting the currency and to say it was gaining on strengthening sentiment for a positive outcome from the ongoing Vienna talks aimed at reviving the 2015 nuclear deal. By the end of trading, the IRR reached 209,000 versus the USD.
Iran looks set to be engulfed by what would be its fifth coronavirus wave. Businesses such as cafes and restaurants as well as shopping centres including the Tehran Grand Bazaar have been ordered to pull the shutters down for at least two weeks as the numbers of coronavirus infections continues to jump following the discovery of the Delta variant originally discovered in India.
The massive upswing in infections is partly due to the poor rollout of vaccines in the country and large increase in black market sales forcing many to have to go without any protection from the virus.
Meanwhile, the southwestern province has been the scene of nearly two weeks of street protests over water shortages amid the most prolonged drought it has suffered in more than 50 years. Several people have been killed in the unrest. Sadeq Ziaeian, director of Iran's National Drought Warning and Monitoring Center, told Iranian media that the rainfall had dropped by nearly 50% in South Khorasan province this year compared to the long-term average and by as much as 80% in southeastern Sistan and Baluchistan province.
Drought-related water deficits have also led to rolling power cuts in localities supplied by hydroelectric plants. They supply around 15% of Iran's power supply, according to energy ministry data.
On the political front, the election of conservative Ebrahim Raisi as president of Iran has driven home a harsh fact for the international community: the Islamic Republic will not be undergoing its long hoped for transformational reform in the near future. Raisi’s presidency starts with his inauguration on August 5. It solidifies conservative control over Iran’s elected institutions and unelected organisations under the purview of Iran’s Supreme Leader Ali Khamenei.
Iran's supreme leader on July 28 raised concerns that Washington has given no guarantee that should Tehran agree to a revival of the 2015 nuclear deal, the US will not at some point abandon the pact again. The issue is a challenging one given that it is not feasible that the current Biden administration in the US could erect an immovable barrier to a successor administration pulling the US out of the nuclear deal, or JCPOA, a second time. Tehran is still raw over how Biden’s predecessor, Donald Trump, broke international convention in May 2018, at a time when UN inspectors said Iran was in full compliance with the JCPOA, unilaterally ending American participation in the multilateral accord painstakingly negotiated by Iran and six major powers. To Iranian hardline politicians, who will have control of the presidency as well as the parliament, the move simply confirmed their contention that the US is never to be trusted.
The sixth round of indirect talks in Vienna between Tehran and Washington on reviving the JCPOA adjourned on June 20, two days after hardline cleric Ebrahim Raisi was elected president of the Islamic Republic. There is as yet no word on when the next round of negotiations will resume.
On July 29, US Secretary of State Antony Blinken said that the nuclear talks with Iran "cannot go on indefinitely" but that Washington was "fully prepared" to continue negotiations.
Looking ahead, the Institute of International Finance (IFF) forecast that should the signatories to the original JCPOA manage to agree a comprehensive new nuclear agreement that moves beyond the 2015 terms, Iran would see GDP expand by 4.3% this year and by 5.9% and 5.8% in 2022 and 2023, respectively.
If Tehran and the major powers fail to strike any agreement to revive the JCPOA, unemployment in Iran would likely remain in double digits and there would be subued economic growth of 1.8% this year, the IIF estimated.
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