Until the past few days, Iranian government\nofficials continued to deny any coronavirus infections in the\ncountry. However, they were unable to maintain this blatant lie after several\nsenior officials and clerics were infected with the virus or died from it. The\nreal situation has now been exposed, with the government admitting, albeit reluctantly,\nthat dozens of people have died, and hundreds have tested positive. <\/p>\n\n\n\n
It is probable that the Iranian leadership feared\nthe coronavirus’s possible economic consequences if the outbreak\nwas announced during an early stage. Iran’s economy is already in dire straits\nwith the country suffering from a severe recession since last year due to US\nsanctions. The country has been recently placed by the Financial Action Task Force (FATF) on its\nblacklist. The worsening\ndomestic coronavirus epidemic has inflicted additional\ndamage on vital sectors of the Iranian economy which the government depends on\nto mitigate the impact of US sanctions. <\/p>\n\n\n\n
It seems that the worst fears of the Iranian\nleadership have occurred\nall at once, with Iran\u2019s future prospects being even gloomier if the outbreak of\nthe virus is not curbed. <\/p>\n\n\n\n
There are several potentially perilous\nconsequences for the already deteriorating Iranian economy if the coronavirus\noutbreak worsens, which may explain the Iranian government\u2019s reluctance to\ndisclose the real severity of the virus. <\/p>\n\n\n\n
Firstly, the country\u2019s religious and medical\ntourism sectors are among the most severely hit by the coronavirus.\nLast year, around 9 million tourists visited Iran to see religious and\nhistorical landmarks, undergo cheap cosmetic surgery operations for which the\ncountry is well-known, or solely for a holiday. A large percentage of tourists\ncame from neighboring countries such as Iraq and some Arabian Gulf states. All\nthese countries recently announced the presence of coronavirus cases among people arriving from Iran. <\/p>\n\n\n\n
Tourism in Iran took a decline due to the spread\nof the coronavirus whose victims include clerics in Qom: a city\nhighly revered amongst Shiites. The\ndecision made by many nations to prevent tourists from traveling to Iran in light of the increasing numbers of deaths and\ninfections from the coronavirus means massive\neconomic losses. Tourists in Iran have been an important source of hard currency worth billions of dollars. This setback suffered by Iran’s travel and tourism industry\nalso means large-scale job losses for workers inside Iran as well as for\nthose <\/strong>facilitating travel between Iran and neighboring countries\nsuch as Iraq and the UAE. <\/p>\n\n\n\n A related affected sector is domestic tourism,\nwhich is effectively suspended at present as an increasing number of Iranians\nself-isolate at home in fear of being infected. The usually busy run-up\nto the Iranian spring festival of Nowruz (the Persian New Year), which will fall on March\n20, 2020, is expected to be a total non-event, with little or none of the usual\nexpenditure on travel, socializing, partying and spending on food, clothes, and\nentertainment.<\/p>\n\n\n\n There are also fears that the coronavirus\nepidemic, coupled with further economic hardship, could unfavorably affect\ndomestic trade. The possible impact of the coronavirus on domestic trade\nincludes commercial depression if the retail sector is effectively paralyzed by\nthe outbreak of the virus leading to more people staying home and\nself-isolating whether voluntarily or by force. This, in turn, would intensify the\neconomic recession, leading to declining trade, sales and purchases and to more\njob losses. There is also the possibility of the\ncoronavirus leading to panic-buying as people\nstockpile edibles and other essential goods as\na precautionary step due to the virus’s outbreak; that eventuality would have\ngrave consequences on prices. This has been seen in affected areas in China and\nSouth Korea. It could further impact Iran\u2019s food safety levels if the coronavirus impedes global trade or affects global production or food supply chains, with Iran already\nneeding to import many food items such as\nwheat, corn, rice, soy, oils, and sugar.<\/p>\n\n\n\n Iran\u2019s foreign trade could also be\nsignificantly affected due to similar problems\nfacing its major trading partners: China, Iraq,\nand the UAE. <\/p>\n\n\n\n In the case of China, by far the Iranian\ngovernment\u2019s largest trading partner, Iran\u2019s foreign trade could be seriously affected\nby a slowdown in growth due to the coronavirus epidemic there. Beijing has been the biggest\nbuyer of Iranian oil and petrochemical exports whose prices have already declined globally over concerns about the Chinese economy slowing and declining demand there. <\/p>\n\n\n\n It is inevitable that commercial\nexchanges between the two countries, along with trade deals, will decline to\nsome degree as a result of the virus. China is also Iran\u2019s biggest supplier of industrial production and manufacturing equipment and\nspare parts. With the coronavirus epidemic\nhitting Wuhan city, the main hub of the Chinese economy, global concern is\nalready mounting about the impact of the virus on China\u2019s industrial production\nand exports. Iranian industry is likely to be hurt by any slowdown in\nChinese productive capacity. <\/p>\n\n\n\n As for Iraq, meanwhile, it has been a prominent\nlocation for Iranian trade since the imposition of US\nsanctions on Iran. Iraq is the number one destination for Iranian non-oil\nexports and Iranian products account for a quarter of the goods in the Iraqi market. <\/p>\n\n\n\n The closure of the Iran-Iraq border and\nrestrictions on movement between the two countries will certainly cause a\nsevere downturn in Iranian exports, depriving Iran of a vital and sorely-needed\nsource of hard currency which Tehran relies on to maintain a decent exchange\nrate. The UAE is another of Iran\u2019s largest commercial customers and an\nimportant trading partner for Iran, whether in terms of re-exporting Iranian\ngoods or importing goods for Iran from abroad. While many ports and trade\nroutes on the Arabian Gulf link the two states, these shared interests are also\nthreatened, with the UAE announcing the suspension of air and maritime shipping\nto and from Iran and planning to repatriate Iranian nationals currently in the\nUAE, most of whom are traders, over the coronavirus outbreak. <\/p>\n\n\n\n These moves are in addition to the announcement\nby some neighboring countries such as Pakistan, Afghanistan, and Turkey of\ntheir intention to close land borders with Iran, which has used border\ncrossings with these countries as outlets for selling its goods. <\/p>\n\n\n\n Hard currency and security markets\nare reflecting the prevalent and growing concerns. Since the announcement of\ndeaths from coronavirus infections, Iran\u2019s\nstock exchange, like others, has suffered a series of falls and fluctuations. <\/p>\n\n\n\n The exchange rate, meanwhile, has also continued\nto deteriorate, with the dollar reaching 16,000 tomans, meaning that the local\ncurrency has lost another 7 percent of its value against foreign currencies. <\/p>\n\n\n\n As worries and concerns over all these issues\nescalate, investors and savers are opting for traditional safe assets like gold\nand foreign currencies, hiking the price of these assets and therefore triggering a new\nwave of inflation in the country. <\/p>\n\n\n\n Meanwhile, the economic impact of other aspects\nof the coronavirus epidemic, including the cost of healthcare and\nquarantine, remains unclear so far. <\/p>\n\n\n\n The virus is also impacting other\naspects of everyday life, with the government closing universities, and schools, \nas well as a downturn, experienced by manufacturers, businesses, traders\nand daily service provides. The aforementioned\nhave aggravated the economic depression that Iran has\nbeen going through which began even before the outbreak of the coronavirus, with the economy expected to shrink by\n9.5 percent according to the International Monetary\nFund, the biggest recession in the country in three decades. <\/p>\n\n\n\n The Iranian government’s policy of secrecy and\nevasion concerning coronavirus deaths and infections has come at a high price, including the increased spread of infections,\nresulting in more deaths, material losses and a further erosion of public\nconfidence. This is in addition to the absence of transparency and lack of\ntrust between the people and the government on\nthe one hand, and the business community and decision-makers in Iran on the\nother. <\/p>\n\n\n\n The timing of the coronavirus epidemic hitting\nIran has been devastating for the country, already gripped by severe financial\nand economic crises over the past year. These crises at present, and in the\nnear future, may worsen in case a cure is not found and the spread of the virus\nis not contained both at home and beyond Iran\u2019s borders.<\/p>\n","protected":false},"excerpt":{"rendered":" Until the past few days, Iranian government officials continued to deny any coronavirus infections in the country. However, they were unable to maintain this blatant lie after several senior officials and clerics were infected with the virus or died from it. The real situation has now been exposed, with the government admitting, albeit reluctantly, that […]<\/p>\n","protected":false},"author":9,"featured_media":7697,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[4363,2581,162,4432,3082,4431,4433],"class_list":["post-7696","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-reports","tag-coronavirus","tag-dilemma","tag-economic","tag-economic-situation","tag-iranian-economic","tag-the-coronavirus","tag-the-coronavirus-in-iran"],"_links":{"self":[{"href":"https:\/\/rasanah-iiis.org\/english\/wp-json\/wp\/v2\/posts\/7696","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/rasanah-iiis.org\/english\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/rasanah-iiis.org\/english\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/rasanah-iiis.org\/english\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/rasanah-iiis.org\/english\/wp-json\/wp\/v2\/comments?post=7696"}],"version-history":[{"count":1,"href":"https:\/\/rasanah-iiis.org\/english\/wp-json\/wp\/v2\/posts\/7696\/revisions"}],"predecessor-version":[{"id":7698,"href":"https:\/\/rasanah-iiis.org\/english\/wp-json\/wp\/v2\/posts\/7696\/revisions\/7698"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/rasanah-iiis.org\/english\/wp-json\/wp\/v2\/media\/7697"}],"wp:attachment":[{"href":"https:\/\/rasanah-iiis.org\/english\/wp-json\/wp\/v2\/media?parent=7696"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/rasanah-iiis.org\/english\/wp-json\/wp\/v2\/categories?post=7696"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/rasanah-iiis.org\/english\/wp-json\/wp\/v2\/tags?post=7696"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}