Candidates in Iranian presidential polls vow to revive flagging economy

FE Team | Published: June 26, 2024 21:12:34

TEHRAN, June 26 (Reuters): Candidates in Friday's Iranian presidential election have vowed to revive the flagging economy, but voters see little prospect of relief from a cost of living squeeze without an end to sanctions and an easing of Iran's international isolation.
The daily struggle of ordinary Iranians to make ends meet is a persistent challenge for Iran's ruling clerics, who fear a revival of protests that have erupted periodically by lower and middle-income communities angry at enduring hardship.
The reinstatement of US sanctions in 2018 hit Iran's oil exports, slashing government revenues and forcing it to take unpopular steps such as increasing taxes and running big budget deficits, policies that have kept annual inflation close to 40%.
Although the country has avoided a total economic meltdown, thanks mainly to oil exports to China and higher crude prices, petroleum exports are still below their pre-2018 levels.
Most candidates seeking to replace Ebrahim Raisi following his death in a helicopter crash last month say they plan to emulate his policy of economic self-reliance and more business ties to Asia. Others have defended broader relations with the world without offering practical steps to address sanctions.
During Raisi's three years in power, Iran's economy re-emerged from a 2018-19 slump caused by the 2018 reimposition of sanctions, and growth peaked at 5.7% for the year ending in March, according to Iran's Statistical Center.
Yet most of this expansion was driven by the energy sector, as the country experienced a 70% rise in oil output, now running at about 3.5 million barrels per day, with oil exports exceeding 1.4 million barrels per day, and mainly going to China.
Without hydrocarbons, Iran's growth last year would have been just 3.4% and its trade balance would have hit a deficit of $16.8 billion, according to Mohammad Rezvanifar, the head of the Iranian customs service. Foreign direct investment has also stalled at $1.5 billion in 2022, according to UNCTAD.
Unemployment is running at about 7.6%, according to the World Bank, compared to 9.6% when Raisi was elected. Yet many formal jobs pay a pittance, meaning the true figure of people without adequate work to live on is probably far higher.