TEHRAN – Islamic Parliament (Majlis) Research Center (IPRC) has predicted the country will face stagflation this year and government’s budget is facing with challenges of rise in expenses and decline in revenues.

IRAN NEWS ECONOMIC DESK IPRC in its recent report has reviewed the economic condition for this year and has forecasted a tough year for the government and the nation.

The report claims the government in the current Iranian calendar year will face with different types of budget deficit problems. The IPRC, even before the outbreak of the Coronavirus and in its previous reports, had warned the government about its budget bill.

It claimed Iran’s economy has faced with the problem of revenues while the government expenses cannot be reduced in accordance with the fall in revenues and this problem has led to the sustainable budget deficit which has been one of the national economic woes in recent years.

The report claimed that the outbreak of the Coronavirus will have its own expenses and will intensify the problem of budget deficit in the current year.

The IPRC in its report pointed that the outbreak of the virus will increase the costs in the health sector and the government’s financial support during the social distancing period.

It also pointed to the decline in revenues as the major factor in the budget deficit, adding that the government’s oil sales and tax earnings will drop drastically. The report claimed that the national economy in the current year will face recession and the fall in demand due to the virus will slow down production and consequently government’s earnings from tax will drop.

The parliament report also warned that the government may resort to the Central Bank to cover its budget deficit and it will lead to the rise in the liquidity in the society and inflation.

It also reiterated that because of decline in demand in the country, the velocity of money in the economy will slow and one can say the current year can be one of those years when the velocity of money will be at its lowest level and the inflation rate will not match the growth in liquidity.

In early April, the IPRC in another report had warned that the government’s delay in extending financial support to low-income people hit by the coronavirus outbreak might entail “painful consequences.”

In an elaborate allusion to the possibility of dissent and protests in Iran, the report charged that what President Hassan Rouhani’s administration has done so far to support “the poor and vulnerable people” has been “belated, passive and non-proactive.”

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IRAN NEWS ECONOMIC DESK

TEHRAN – Majlis Research Center (IPRC) in its latest report has warned the current economic environment and called for reform in financial environment which is a major concern for the business in the country.

The IPRC in its report, which analyzed the general view of national economy for the current year and forecasting the prospect for the next year, has claimed the inflation rate for next Iranian calendar year would be between 20 to 25 percent.

It further says according to the latest signs from the economic performance in the first half of the current year and analyzing events by the yearend, Iran’s economy is forecasted to grow by 18 percent by the yearend without oil while the growth in the agro sector will be 5.5 percent, in industry 1.5 percent, in gas, electricity and water 10 percent, in construction 14.5 percent and 1.5 percent in services.

The report notes that on the whole, although the economic growth rate is expected to be lower than last year but the condition in non-oil sector is by far much better than last year. It reiterates that negative growth in oil sector is the main reason for fall in the total economic growth rate.

The IPRC reiterated that because of the sanctions on oil sector, it seems Iran’s economy next year would jump out of negative zone.

On the occupation and unemployment, the report says 850,000 people have joined the employment wagon this summer and the unemployment rate in spring and summer was downward at 10.8 and 10.5 percent respectively.

The report also admits increase in the number of unemployed educated youth joining the job market has made the condition worrying for next year.

It also noted that a research and interviews with economic activists in the country show that they are unhappy with improper financial environment and called it the biggest problem for business environment in the country. They have warned as long as the financial system is not reformed, the condition will not improve, the report claimed.

The report also pointed to the trend for increase in inflation rate last year and in the first half of the current year which caused the inflation rate to reach 43 percent in September.

It also predicts the average inflation rate to be 35 percent by the yearend and if this condition remains stable, the average inflation rate for next year will be between 20 to 25 percent.

The report reiterated if the government decides to increase the taxes to cover its budget deficit, the inflation rate will soar more next year.

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