The war with the US and Israel has accelerated the decline of the Iranian economy, while the blockade of ports and the destruction of infrastructure have put the country on the brink of the worst humanitarian crisis in its modern history, according to an analysis by Bloomberg.
Inflation in Iran has reached its highest level since World War II (almost 80%), and the national currency has lost about 30% of its value since the beginning of the current year. The International Monetary Fund predicts a contraction of the Iranian economy by 6.1%.
Due to declining purchasing power, Iranians are massively switching to installment payments for food and essential goods („buy now, pay later“). Previously, such schemes were only used for expensive appliances or furniture.
According to Hadi Kahalzadeh, a visiting fellow at the Quincy Institute in the US, approximately 70% of Iran's population is now classified as vulnerable or poor.
The mechanisms that help the regime avoid immediate economic collapse - informal trade, the shift to China and state control - simultaneously perpetuate poverty, unemployment and high inflation, he warned.
The US has imposed a prolonged naval blockade of Iran's most important ports, which businessmen say is causing even more damage to the economy than the military operations themselves. According to Majid Reza Hariri, chairman of the Iran-China Chamber of Commerce in Tehran, land and rail routes will never be able to compensate for the sea trade on which Iran depends and from which it has been losing a lot in recent months.
A prolonged sea blockade is likely to lead to “serious shortages of food, fuel, medicine, industrial raw materials or foreign currency“, warned Mohammad Reza Farzanehgan, professor of economics at Germany”s “Philips“ University in Marburg. He added that rationing and price controls will likely have to be expanded.
US Treasury Secretary Scott Besant yesterday threatened Iran with further increased economic pressure and the imposition of economic isolation the likes of which the world has never seen.
Meanwhile, conservative circles in the Iranian leadership are calling for an end to all diplomacy with “infidels” and for ignoring economic hardship.
The war in the Middle East is not only a blow to Iran, but to the global economy. Countries dependent on energy imports, especially poorer countries, will suffer the most.