Iran: progress & problems


The nuclear deal struck 2 years ago, and that Trump has been pressured to maintain, has brought some economic progress for Iran:

  • Inflation is down from 45 to 10%;
  • Oil/gas/petrol revenue is up;
  • GDP has risen by 12%;
  • Iran is issuing debt (trading on the debt markets shows a measure of confidence in the economy).

However, there are still major problems.

60% of the economy do not pay tax, mostly via exemption but 20% through evasion.

And the economy is held hostage by Saudi Arabia. Riyadh and Tehran are in a constant battle for Middle Eastern supremacy. The Saudis use oil as a weapon, flooding the market, to deprive Iran of billions in revenue.

And even though lower inflation rates are welcome, interest rates have risen to a high 30%. Many businesses are now struggling to repay loans. There’s a big risk that a banking crisis is coming, as the number of write offs that Iranian banks are making soars.

An unregulated credit sector has arisen.

Fiscal policies have also made problems worse: taxes have been cut whilst spending has increased, widening the deficit.

And to make matters worse, there’s a new range of US sanctions about to hit.



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