Where Is Iran's Economy Heading in the Second Half of 1405? | Tehran Chamber Member: Country's Problems Won't Be Solved Even with an Agreement

A member of the Board of Representatives of the Tehran Chamber, criticizing economic instability and constant regulatory changes, said: Many businesses can no longer plan long term, and are even forced to constantly change their weekly plans.

Messiah Heydarian; Economic instability and continued ambiguity in foreign relations have made it difficult for private sector economic activists to predict the state of Iran's economy in the second half of 1405. In such a situation, various scenarios are proposed about the path of Iran's economy; From continuing the current situation and increasing economic pressures to the possibility of improving foreign relations and creating an opportunity for the economy to return to the path of growth.

Mehrad Ebad, a member of the delegation of the Tehran Chamber, in a conversation with Ambassador Arjan, referring to the difficulty of predicting the state of Iran's economy in the second half of 1405, said that the continuation of internal and external instabilities has complicated the decision-making environment for economic activists more than before.

Three scenarios for Iran's economy in the second half of 1405

Referring to various scenarios regarding Iran's economic prospects in the second half of 1405, Ebad stated: Considering the instability of the last few months, it has become very difficult to accurately predict the future of the economy, and for this reason, most analyzes have moved towards examining various scenarios.

Regarding the pessimistic scenario of Iran's economy, he added: the worst case could be the continuation of the war or the continuation of the situation of "no war, no peace" in international relations. The continuation of such a situation can increase domestic economic pressures and make economic activity conditions more difficult.

The member of the delegation of the Tehran Chamber continued pointing to the increase in sanctions pressures: on the one hand, economic sanctions and external pressures have increased, and on the other hand, the economic problems accumulated inside are still standing. Economic reforms have been carried out in the past years, but a significant part of the required reforms are fundamental and structural and have not yet been fully implemented.

Referring to the country's production and foreign trade situation, Ebad said: Recent statistics indicate a decrease in GDP per capita, and the amount of import and export has also decreased by 25% in the last five months compared to the previous period.

Regarding the consequences of the continuation of the current situation for Iran's economy, he noted: In a pessimistic scenario, the significant dependence of Iran's economy on international relations makes the continuation of foreign tensions more difficult, and some economists have even raised the possibility of increasing the dollar rate up to the range of 300,000 tomans.

middle scenario; Continuation of uncertainty in Iran's economy

Ebad explained about the middle scenario of Iran's economy: In the middle scenario, existing tensions will not increase, but the situation of "no war, no peace" will continue. In this situation, the economic pressure may be less than in the pessimistic scenario, but we should not expect a significant improvement in economic conditions.

Referring to the impact of instability on foreign and domestic trade, the member of the delegation of Tehran Chamber added: The current conditions have directly affected foreign trade and domestic trade and have resulted in a decrease in the efficiency of economic activities.

He said about the exchange rate in the middle scenario: if the current situation continues, it is possible that the value of the national currency against the dollar will remain in the range of 250 thousand tomans; Therefore, in total, we can imagine a range between 200,000 and 300,000 tomans for the dollar rate in different scenarios.

The foreign agreement can give a positive shock to Iran's economy

Ebad said about the optimistic scenario of Iran's economy: the best scenario is that a suitable international agreement is formed and Iran's foreign trade relations are close to the normal situation.

Referring to the time-consuming nature of Iran's economy returning to pre-sanctions conditions, he added: even if an agreement is reached, it will take time to fully return to pre-sanctions conditions, and negotiations and the process of lifting sanctions will not be completed quickly.

Referring to the quick reaction of Iran's economy to political and international news, the member of the delegation of the Tehran Chamber noted: Considering the current conditions of Iran's economy, many factors show their effect in the short term and even the announcement of the agreement can give a positive shock to the economy.

About the possible effect of the agreement on the foreign exchange market, Ebad said: If the news of the agreement and the normalization of foreign relations is published, some of the bubbles in the economy can be emptied, and in such a situation, some forecasts indicate a decrease in the dollar rate to the range of 200 thousand tomans.

Regarding the path of Iran's economy after the improvement of foreign relations, he added: If Iran's trade relations are established more quickly, the import of raw materials needed for production increases and exports are developed, the possibility of improving the economic conditions in the next year will increase.

Referring to the necessity of internal reforms, the member of the delegation of the Tehran Chamber emphasized: improving foreign relations alone is not enough, and to achieve sustainable economic growth, internal problems such as the government's budget deficit and the inefficiency of some business processes must also be corrected.

Ebad noted about the short-term outlook of Iran's economy in 1405: Even in the most optimistic scenario, considering the remaining time until the end of the year, it is not possible to completely compensate for the economic problems in the short term, and part of the possible positive effects of the agreement and the reduction of tensions can be seen in the coming year.

private sector; From development to survival

Ebad explained about the view of the private sector on Iran's economic prospects: a large part of private sector activists have become tired and disappointed in recent months. The continuous release of different news about the agreement or non-agreement and going back and forth between positive and negative news has eroded the economic environment for business operators.

Referring to the state of economic enterprises, he said: Many economic activists continue to operate, but a significant part of the enterprises are looking for survival in the current situation and have left the issue of development and progress out of their priorities.

Referring to the concept of resilience in the private sector, the member of the delegation of the Tehran Chamber noted: Resilience has now become one of the most important issues of concern to the private sector. Economic activists are trying to overcome the current difficult conditions, but economic instability has deprived many enterprises of the ability to predict the future.

Ebad said about the effect of economic instability on business planning: economic growth needs stability so that the private sector and economic enterprises can make decisions for the future, but now even planning for a future day has become difficult for many economic activists.

Referring to the change in the horizon of planning in economic enterprises, he added: In the past, many companies set annual plans and had a specific plan for the next year, but now, due to the continuous changes in economic conditions, regulations and directives, many plans even have to be reviewed and modified weekly.

"Domestic sanctions" along with foreign sanctions

Referring to the continuous changes in internal regulations, Ebad said: The frequent changes in internal regulations and directives have put additional pressure on the private sector, and from the point of view of economic activists, this situation has created a kind of "internal sanctions" in addition to foreign sanctions.

He said about the simultaneity of internal and external pressures on economic enterprises: foreign sanctions have also become more widespread and the combination of external pressures with the instability of internal regulations has made the activity space for the private sector more ambiguous than before.

A member of the delegation of the Tehran Chamber of Representatives said about the role of the government and foreign policy in the transition of Iran's economy from the current situation: In the current situation, the role of activists in the field of foreign diplomacy and government policy is very important, and the approach of the government and the Ministry of Foreign Affairs should move towards creating a constructive interaction with the world.

Ebad continued by referring to the instability in Iran's external parties: the opposite parties are also facing instability in decision-making, and the constant changes in political decisions have made the operating conditions more difficult for Iran's private sector companies.

Referring to the consequences of sanctions for the society and the private sector, he pointed out: In the past years, the pressure of sanctions has been more on the people and the private sector than on the government, and the increase in sanctions will also put more pressure on companies and households.

Regarding the effects of air transportation restrictions, the member of the delegation of the Tehran Chamber added: flight restrictions are an example of pressures that directly affect people's lives; From the travel of citizens to other countries to the transfer of some essential goods such as medicine, part of which is carried out by air.

Explaining the desired direction of Iran's economy, Ebad said: We hope that the country's situation will move towards normal conditions as soon as possible and that Iran will be able to establish more normal trade relations by maintaining its national authority and establishing constructive interaction with the world.

Referring to the ultimate goal of economic reforms and improving foreign relations, he emphasized: If the goal is to develop the country, increase the welfare of the people and reduce livelihood problems, a series of internal and external measures must be carried out simultaneously so that Iran's economy can return to the path of development.