Inflationary stagnation worsened / economic growth was negative 10.1%

Iran's economy experienced a negative growth of 10.1% in the spring of 1405, and its annual inflation reached 73.6% by the end of September. A combination that indicates the intensification of inflationary stagnation. Examining the performance of Iran's economy since the 1940s shows that the country has also gone through periods of severe decline in production and high inflation, but the coincidence of these two indicators at the current level has created unprecedented conditions in the last few decades.

Iran's economy experienced a negative growth of 10.1% in the spring of 1405, and its annual inflation reached 73.6% by the end of September; A combination that indicates the intensification of inflationary stagnation. Examining the performance of Iran's economy since the 1940s shows that the country has also gone through periods of severe decline in production and high inflation, but the coincidence of these two indicators at the current level has created unprecedented conditions in the last few decades.

According to Ambassador Arjan, in the past six decades, Iran's economy has traveled a path full of ups and downs, from double-digit growth and low inflation to periods of stagnation, currency instability, and chronic inflation. In the 40s, the average economic growth reached about 11.4% and inflation was at the level of 1.6%; But in the following decades, the gap between the growth capacity of the economy and the inflationary pressure gradually increased. Now in 1405, with a negative economic growth of 10.1% in spring and an annual inflation of 73.6% at the end of September, the main question is how the Iranian economy has reached one of the most difficult situations of stagnant inflation in recent decades from a period of high growth and low inflation.

In 1405, Iran's economy has entered one of the most difficult periods of inflationary stagnation in recent decades with unprecedented inflation and a sharp drop in economic growth. According to the Statistics Center of Iran, the annual inflation reached 73.6% and point-to-point inflation reached 89.8% by the end of September, and the economic growth in this spring was negative 10.1%. Comparing these figures with the performance of Iran's economy since the 1940s shows that although the country has experienced deep recessions and high inflation in the past, the intensity of the coincidence of these two indicators in the current situation is unprecedented.

In the 40s, Iran's economy had a different combination of high growth and low inflation; The average economic growth reached 11.4% and the average inflation reached 1.6%. But in the 1950s, with the decline in growth, political developments and the beginning of economic crises, the average growth dropped to about 1% and the average inflation increased to 13.5%.

The 60s were affected by the eight-year war and economic restrictions. The average economic growth of this decade was about 2.7% and the average inflation was 18.1%. The economy experienced a sharp decline in some years; including in 1359, when economic growth reached negative 21.6%. However, the inflation of that period was still far from the current level.

In the 70s, the post-war economy entered a period of restructuring and changing economic policies. The average economic growth reached 5.3%, but the average inflation was about 24.4%. Inflation reached 49.4% in 1374, which was considered one of the highest inflation rates recorded after the revolution for many years.

The 80s was a relatively more stable period in terms of the combination of growth and inflation. Average economic growth was 5.3% and average inflation was 14.7%. However, this situation did not continue in the 90s. Sanctions, currency shocks and the withdrawal of the United States from the JCPOA weakened the economic growth and the average growth reached about 1.1%; While the average inflation increased to 25.2 percent.

In the first four years of the 1400s, Iran's economy experienced positive growth again, and the average annual growth between 1400 and 1403 reached about 4.4 percent. However, inflation was not contained and reached 53.1% in 1401. In 1404, according to the estimate of the central bank, the economic growth decreased to minus 2.8 percent, and in the spring of 1405, the growth rate decreased to minus 10.1 percent; At the same time, annual inflation increased to 73.6% at the end of September.

A comparison of the trends of the last few decades shows that Iran's economy has gradually moved away from the period of high growth and low inflation and has faced structural problems of low growth, chronic inflation and currency instability. Although this path has not always been the same and the 80s is an example of a relative improvement in economic performance, the conditions of 1405 have created a distinct situation in terms of the simultaneity of very high inflation and severe negative growth.

The most important feature of Iran's economy in 1405 is not simply the increase in inflation or the decrease in economic growth, but the simultaneous occurrence of these two crises. The experience of the past decades shows that deep recessions and high inflation have occurred before, but the combination of negative economic growth of 10.1% with annual inflation of 73.6% has put the country's economy in one of the most difficult situations of inflationary stagnation in recent decades.

You can see the full text of this report along with its table here.

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