Iran’s economy improving despite sanctions

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World Economy

Sunday, January 6,2019

By Sadeq Dehqan

A lawmaker says the US sanctions that were reimposed on Iran has lost its initial adverse effects, adding that the economy is now improving.

In an exclusive interview with Iran Daily, lawmaker Hamid Reza Hajibabaei said that “most of the negative consequences experienced by the country’s economy after the US sanctions were psychological.”

US President Donald Trump announced on May 8 his withdrawal from the nuclear deal Iran signed with world powers in 2015, formally known as the Joint Comprehensive Plan of Action (JCPOA), and returned sanctions against Iran later in two rounds.

The first round of renewed sanctions entered into effect in August, with the second batch in early November.

Hajibabaei, a member of Parliament Planning and Budget Committee, said the passage of time since the reimposition of sanctions shows that the economy is becoming more stable and “the bubble of prices is deflecting”.

“After the reimposition of second batch of US sanctions, the conditions have turned into Iran’s favor and we are now witnessing that the negative effects of the sanctions are declining.”

The lawmaker then pointed to the decline in value of US dollar in the domestic market in the past month.

“The dollar exchange rate has declined from 180,000 rials to almost 100,000 rials,” he said, noting that the huge decline shows that the initial sharp increase in the value of dollar was just “psychological”.

He added that people are now realizing that the consequences of sanctions were mostly psychological.

“Even the US authorities have now realized that the impact of their sanctions was not as harsh as they expected.”

The lawmaker added that many businesses in Iran have become somehow “immune” against sanctions and that people can now better analyze the real impacts of sanctions.

 

Declining oil revenues

 

Hajibabaei said the declining oil prices can affect Iran’s next year budget (which starts March 21, 2019), adding reviewing the budget can be helpful in neutralization of this effect.

He said the next year budget calls for more transparency and more prudent consumption.

The lawmaker said that the budget has been planned taking into consideration the US sanctions on Iran. “The budget’s consistency with (Iran conditions) under sanctions is one of its strong points.”

He also added that the government’s concern for the livelihood of the low-income families would be taken into account by the lawmakers.

 

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