Iran Enters Deep Recession, Admits 27% Unemployment

Iran's saffron seeks global recognition
AFP ATTA KENARE
JOHN HAYWARD

The government of Iran is prone to belligerent defiance about the resilience of its economy in the face of U.S. sanctions, but Radio Farda noted on Wednesday that even the dubious data officially released by Tehran depicts a country in “deep recession” with staggering unemployment rates.

Radio Farda explained that even though Iran’s official statistics bureau laughably counts people who work one hour per week as “employed,” it still found 27 percent unemployment among young Iranians, 40 percent among university graduates, and job creation puttering along at 550,000 jobs for the year when 900,000 are needed. The Iranian year begins on March 21, so those totals are about two months shy of being final for 2018.

The Radio Farda article advanced some other reasons to find Iran’s official data “barely convincing”:

For instance, the economic growth rate for the past six months has declined in comparison to the average growth rate last year. As a matter of fact, in the last few months of 2018, Iran officially entered a deep recession. The decline must have affected the unemployment rate, but there is no trace of it in the statistics Iran has released.

Meanwhile, Iranian employment figures are based on limited samples but their results are generalized to the entire heterogeneous society. Such a methodological flaw will affect the results. So, even if the unemployment figures have not been manipulated, they are questionable from a methodological point of view. Therefore, true unemployment figures for this year can be much higher that what has been announced.

This should satisfy the curiosity of anyone who wonders how Iranian officials can survey the bleak wasteland of their job marked and pronounce general unemployment to be merely 11 or 12 percent.

As with any other economy, raw totals do not tell the whole story in Iran – it matters who is unemployed, and why, and for how long. Radio Farda noted employment is politicized in authoritarian Iran, with pronounced discrimination against those who demonstrate insufficient loyalty to the Islamic Republic, especially when they pursue government jobs. The shortage of entry-level positions pushes youth unemployment to double the general rate, while investment and manufacturing are in “free fall,” presaging even worse times to come.

Iran’s domestic strategy anticipates 8 percent growth to bring unemployment down, but the actual World Bank forecast is for a 3.7 percent contraction, and the more pessimistic Iranian legislature worries it might be even worse than that since the full effect of U.S. sanctions against Iranian oil is just now being felt.

The Financial Times in December quoted British officials who said Iran’s economic collapse is driving a wave of refugees toward the U.K., a destination of choice since Iran’s horrendous human rights record makes the U.K. reluctant to repatriate Iranians. The number of Iranians trying to cross the Channel in small boats reached 220 in the last two months of the year, enough for the British government to treat the situation as a crisis.

Foreign Affairs postulated on Thursday that Iran’s economic forecast is so dire that even Ayatollah Ali Khamenei and his hardline religious firebrands feel obliged to honor the Iran nuclear deal, formerly known as the JCPOA, even after U.S. withdrawal.

Conventional wisdom had the Iranians bailing out of the deal as soon as President Donald Trump withdrew and the Iranians constantly attempt to intimidate Europe by threatening to restart nuclear missile research, but in truth, withdrawal has become a course of action they simply cannot afford. The countervailing concern would be that Iran’s economy might crumble so badly that its rulers no longer care about the penalties for dropping out of the JCPOA, but at that point, they might lack the financial means and industrial capacity to conduct meaningful weapons research.

NPR on Tuesday noted European Union efforts to do business with Iran have “bogged down,” in part because “Tehran is wary of complying with Western standards on things like money laundering and cutting off funding for militant groups.”

NPR interviewed some Iranians who put the blame for their dismal economy on their own government, but Ayatollah Khamenei – a billionaire with vast sums reportedly salted away in foreign accounts despite his sparse clerical wardrobe – defiantly lashed out at the United States again on Wednesday, calling U.S. officials “first-class idiots” and predicting the American plan to squeeze Iran with sanctions will meet “unprecedented” defeat.

.