Iran’s Poverty Crisis Deepens: Over 32 Million Struggle with Food Insecurity Amid Inflation and Sanctions
-
Yasmin Alta - . November 18, 2024
- . Update: November 19, 2024 2:33 am
Rising food insecurity and economic difficulty, more than 32 million Iranians—more than one-third of the country’s population—were living below the poverty line by March 2022. A study by the Iran Chamber of Commerce Research Center clarifies the concerning level of poverty in the nation by linking the pattern to decades of unbridled inflation and the effects of devastating U.S. sanctions.
Years of Inflation: An Ongoing Difficulty
With decades of double-digit inflation setting the foundation for the current crisis, the report underlines that Iran’s economic woes result from long-term structural problems. In 2019, inflation has gotten much worse and passed 40% yearly. The issue worsened in 2018 when the US reinstated sanctions limiting Tehran’s capacity to sell oil, its main source of income. These penalties represented a turning point, aggravating the already existing economic difficulties Iran was facing for years.
The penalties set up a sharp economic crisis. Since 2018, Iran’s national currency, the rial, has dropped nearly 15 times its value versus the U.S.dollar. This depreciation has driven up imported goods and raw material costs, therefore driving up basic need prices.
One of the main markers of economic hardship, food poverty has skyrocketed recently. About 18 million Iranians were identified as food deprived in 2017. By 2020, this count had surged to around 26 million. Millions of people today lack enough food to satisfy their dietary requirements, a sign of how severely inflation and poor economic policies have impacted common people.
Policy Failures and Inflation
The report of the Chamber of Commerce Research Center emphasizes the need for first stabilization of inflation. It contends that anticipating a notable drop in inflation by means of traditional monetary or fiscal policies is unrealistic in the present situation.
“Policymakers must concentrate on stabilizing inflation and ensuring price stability to build a basis for economic recovery,” the paper states. Attempts to sharply lower inflation without tackling systemic inefficiencies are probably going to fail.
Government efforts to alleviate the economic crisis—including steps to stabilize the rial and boost home industry—have had meager success. The paper emphasizes ongoing challenges including inefficiencies in government, too high public sector expenditure, and over-reliance on printing money to offset budget deficits.
Unchecked economic growth of liquidity in the system is one of the main causes of Iran’s inflation. Mostly to cover budget deficits, the government has continually pushed the Central Bank to print money without enough reserves to support it.
Figures from the International Monetary Fund (IMF) show that in recent years, Iranian liquidity has increased yearly by 25–40%. With more than 27% estimated increase in liquidity in the next few years, this trend is expected to keep on increasing. Such explosive increase in liquidity has led to runaway inflation, which has driven Iran into the top 10 countries with highest inflation rates worldwide. Iran is expected by the IMF to have the sixth-highest inflation rate worldwide next year.
Poverty rates have been substantially affected by the economic difficulties. A recent estimate from Iran’s parliamentary research department shows that the poverty rate increased by 0.4% during the past Iranian calendar year (ending March 2024), rising it to 30.1%. Consequently, over one in three Iranians today live in poverty and cannot afford basic essentials including food, housing, and healthcare.
A research by Tehran-based Ham-Mihan newspaper, which approximates that more than half of Iranian households live below the relative poverty line, presents even more alarming images. To buy basics like meat, dairy, and household items, many families have turned to payment agreements, therefore underscoring the extreme financial burden on common people.
Systemic Inefficiencies and a Glum Future
The Chamber of Commerce study points up various structural problems causing economic uncertainty and inflation. These include ineffective government, too high public sector salary and program expenditure, and an over-reliance on transient solutions like printing money. These issues together with the difficulties caused by sanctions have set off an economically unstable cycle that is difficult to stop.
Strict contractionary policies are advised against in the report since they can worsen the situation of the economy. Rather, it supports policies meant to bring down inflation and provide a more consistent economic environment that would encourage manufacturing and investment. Adopting such measures, however, will need resolving systemic inefficiencies and restoring public confidence in the government’s capacity for economic management.
The Human Cost
For common Iranians, the economic crisis is a daily struggle for survival rather than only a collection of numbers. Families find it more and more difficult to afford basics due to skyrocketing prices for everyday items. With many homes cutting back on meals or depending on fewer nutrient-dense options to get by, food insecurity has shockingly risen.
Many Iranians now have little optimism for the future since the devaluation of the rial has also depleted savings and lowered buying power. The absence of significant employment prospects and the high cost of living have driven general discontent; demonstrations against economic circumstances have been increasingly regular in recent years.
Although Iran’s economy faces difficult problems, the Chamber of Commerce research indicates that focused changes could assist to stabilize things. Among these are initiatives to lower government inefficiencies, cut too high public expenditure, and carry out policies meant to steady inflation.
Nonetheless, significant development will probably depend on a resolution to the international sanctions limiting Iran’s economic capacity. Iran’s choices for handling its economic problems remain few without access to global markets and the capacity for oil exports. With millions of people trying to satisfy basic needs in the face of extreme inflation and systemic inefficiencies, Iran’s poverty crisis has gotten to a critical level. The meager efforts of the administration to solve the situation have left many Iranians with little hope for development.
The need for systematic changes and a resolution of international tensions has never been more pressing as the country works through these difficulties. Iran runs the danger of more economic collapse without firm action, which would have terrible effects on its people.
