Politicians may argue about the impact of sanctions on an economy according to their standpoint – but new figures show how they can grind a nation to a halt.
Sanctions imposed on Iran by US President Donald Trump are pushing the country’s economy into recession despite unified defiance on the world stage from the Iranian government.
They say the sanctions are not a problem and that they can be worked around, but the data tells a different story.
The sanctions were laid only six months ago, when the US accused Iran of flouting an agreement to stop building nuclear weapons.
Before the sanctions, the country’s economy was rising, mainly due to restarting exports of oil and gas.
Oil exports collapse
But growth has fallen from 12% in 2016 to -6% this year, according to Iran’s central bank.
The output of oil is one of the headline factors affecting the economy.
At the start of 2018, output was 3.8 million barrels a day, with 2.3 million barrels a day going to export, says OPEC, the oil exporting cartel.
The oil was bought by eight countries with a six month sanctions waiver that gave them time to find new suppliers.
Those waivers expired this week.
Last month, exports were shown to have halved to 1.1 million barrels a day and this month, they stop.
Currency down, inflation up
China is Iran’s biggest market, taking 600,000 barrels a day and argues the trade is perfectly legal and will continue. But Iran cannot rely on this as Beijing is notorious for taking a view and then horse-trading with Washington to gain leverage elsewhere.
The economic collapse has led to a fall in the value of Iran’s currency, the rial. The value of the rial is 40% down against the US dollar and falling. The official rate is 42,000 rial to the dollar, but currency traders won’t agree less than 143,000 rial to the dollar, a measure of the true fall of the currency.
Inflation is another economic measure going haywire in Iran.
Not too long ago, the cost of living was rising by around 9.5% a year – this is forecast to hit 35% plus this year.