How COVID-19 Increases Poverty in Iran

https://rasanah-iiis.org/english/?p=9824

ByRasanah

Iran is facing mounting levels of poverty exacerbated by the coronavirus pandemic, which has hit the country hard since its outbreak in 2020. The mismanagement of the pandemic resulted in Iran being one of the worst impacted countries in the world in terms of infection and mortality rates. Only 4 percent of the total Iranian population is fully vaccinated. Against this backdrop, it is not surprising that Iran’s economy has suffered further, particularly experiencing a hiked poverty rate. In 2020, the expected fall in income levels combined with a high inflation rate led to a sharp 11 percent increase in the poverty rate, with the poorest in Iran facing the brunt of this crisis. Around 6 million Iranians reportedly earn wages in the country’s informal sector and depend on daily wages. In fact, the real per capita household expenditure fell on average by one-third in the first month after the outbreak of the pandemic in Iran during 2020.

In the same year, nearly 3 million to 4 million Iranians faced unemployment, as the country’s gross domestic product (GDP) shrunk by 5 percent. The real unemployment rate was estimated at  20 percent to 35 percent due to the pandemic. By October 2020, a reported 35 percent of Iranians lived below the poverty line, according to Iran’s Parliament Research Center. The consumer price inflation index reached 46.6 percent by November 2020, causing drastic price increases in food and housing, according to the World Bank (WB). Despite Iran’s Parliament approving approximately $7.1 billion to ease the impact of the pandemic, the WB forecasted that its impact would be limited if living costs continued to rise.

In light of the Iranian government’s inability to shut down the economy to flatten the mortality curve due to the pandemic, several subsequent waves of the coronavirus pandemic have hit Iran really hard. For example, in 2020-2021, despite Iran’s economy rebounding by 1.7 percent, its GDP recovery was expected to be slow. In April 2021, the WB projected that the economic recovery path was risky due to the pandemic, given the resurgence of COVID-19 and the inflation rate over 20 percent. By June, reports showed that many Iranian companies either downsized or closed down due to the pandemic. Unsurprisingly, there were 1.4 million fewer jobs in Iran by spring 2021, compared to 2020. Additionally, 2 million fewer people were part of the labor market.

According to official reports, Iran lost more than 1 million jobs within a year after the pandemic, leading to increased poverty levels. More recent figures point to the loss of 1.5 million jobs, which combined with a high inflation rate now over 36 percent, leaves only one in four Iranians capable of earning a wage. Most of the jobs lost were held by women who often worked in unsustainable economic sectors. Meanwhile, nearly 26.7 million Iranians, or over 31 percent of the population, were living below the poverty line by August 2021. Absolute poverty rates are hitting at least 25 million Iranians, who are unable to meet even the most basic human needs such as food, water, shelter and education. Some Iranian lawmakers claim that 60 percent of the population actually live below the poverty line.

The social impact of the pandemic and poverty has been devastating in Iran. The rate of migration and suicide across Iran has drastically risen. It is also estimated that at least 51,000 Iranian children lost a parent due to the virus. Nearly 60 million Iranians are now in need of subsidies, according to official reports. Another ugly side of the pandemic is the impact it has had on Iran’s health indicators. According to official reports, malnutrition across Iran is leading to increased health risks for the elderly, low weight in newborns, and children with shorter than average heights. An estimated 35 percent decline in food purchasing power for the average Iranian household has contributed to rising health problems across the country.

Moreover, an increased number of Iranian students have dropped out of school, and have attempted to enter the informal labor market. As a result, Iranian children are facing an increased risk of exposure to the health pandemic. More and more children work in the informal sector, collecting garbage, washing cars, or begging on the streets, which has contributed to rising infection and morality rates. In urban areas, food insecurity is leading to high infection rates, as the poor search for basic food in unhygienic environments, often eating disposed of food including bread, fruit, rice and vegetables.

Not surprisingly, Iran’s government is at a loss over how to break the poverty cycle which has been worsened by the pandemic. New reports indicate that despite subsidies, nearly 40 percent of Iranians are now living below the poverty line, while the price of food items has increased by 60 percent. Lower consumption rates have also led to the closure of hundreds of businesses, which has added to the unemployment and poverty rates in the country.

Rasanah
Rasanah
Editorial Team