According to Iranian media reports, Iran is suffering from the fourth wave of the epidemic. The government decided that starting from April 10, Iran will implement a 10-day blockade in 23 provinces across the country. During the holy month of Ramadan, which starts on April 13, all religious gatherings will also be banned.
On April 11, local time, Iran once again announced measures to deal with the fourth wave of the new crown epidemic. Iran’s Minister of Roads and Urban Development Eslami said that due to the fourth wave of COVID-19 in Iran, Iran has decided to impose travel restrictions on 39 countries.
As for the reasons for the emergence of the fourth wave of the epidemic, Iranian President Rouhani said on April 10 that the virus was first discovered in the United Kingdom and introduced to Iran via Iraq. The mutated new coronavirus is the main reason for the fourth wave of the epidemic in Iran. But in fact, it was the Iranian people who ignored the ban issued by the country, did not wear masks, and traveled and gathered frequently, which led to the rebound of the epidemic.
Data from the Iranian Ministry of Health shows that about 15,000 people who tested positive for the new coronavirus violated quarantine regulations and traveled during the Islamic New Year holiday. According to a speech on April 10, spokesman for Iran’s National Epidemic Prevention Command, Lehi said that the number of patients admitted to hospitals across Iran has increased significantly, and the situation may become more serious in the future.
While the epidemic in Iran continues to worsen, Iran’s economy also continues to deteriorate.
The biggest impact on foreign traders at present is:
01. Currency depreciation & inflation
Due to the impact of US sanctions, The exchange rate of the Iranian rial continues to fall. The rial has depreciated more than 3,500 times in the past 30 years. Currently, the exchange rate of the U.S. dollar against the Iranian rial is as high as 42,000:1, and domestic inflation is extremely violent.
To this end, the Central Bank of Iran launched a new 50,000 rial banknote on March 6, 2021, which is equivalent to US$1.19 at the current exchange rate. 10,000 or 20,000 riyal notes will also be issued in both denominations in the coming months. The three denominations of banknotes will have the same specifications.
The Iranian government reformed the “face value” of the rial and changed the official currency from the rial to the toman (1 toman is equivalent to 10,000 rial), and the Iranian parliament voted to pass the “Iran Amendments to the Currency and Banking Act require regulators to re-estimate domestic inflation under the new currency.
According to Iran’s “Financial Tribune” report on February 20, the latest data from the Iranian National Statistics Center showed that the average goods and services in the first 12 months as of the end of the 11th month of this fiscal year (February 18) The consumer price index (CPI) rose 34.2% year-on-year. Among them, the CPI in urban areas increased by 34.1% and in rural areas by 35%. Looking at subcategories:
Food and beverages increased by 34.7% year-on-year;
Tobacco increased by 33% year-on-year;
Clothing and footwear increased by 36.8% year-on-year;
Housing, water, electricity and fuel increased by 24.7% year-on-year;
Furniture and home appliances increased by 43% year-on-year;
Health and medical care increased by 28.3% year-on-year;
Transportation increased by 65.3% year-on-year;
Communications increased by 15.1% year-on-year;
Leisure and entertainment increased by 39.7% year-on-year;
Education increased by 21.4% year-on-year;
Hotels and restaurants increased by 27.6% year-on-year;
Other miscellaneous items increased by 35.5% year-on-year.
Inflation is serious in Iran. Will Iran’s currency reform plan be effective in dealing with Iran’s currency devaluation and severe inflation?
CBS reported that Iran’s introduction of a new currency, Toman, directly changed the face value of the rial, but this move did not change the plight of Iran’s currency’s severe depreciation. Iran has been subject to international sanctions for a long time, and the COVID-19 epidemic has further impacted the Iranian economy and put greater pressure on the exchange rate.
Sayed Reiraz, an adviser to former Iranian President Khatami and an Iranian economist, said that changing the name and face value of the currency will inadvertently bring unnecessary fluctuations to the economic and social structure, and ultimately This may lead to more severe inflation.
02. The government restricts imports
In response to the US sanctions against Iran’s economy and industry in all aspects, Iran has adopted the “anti-crisis economy (resistance Economy), self-reliance” approach encourages exports and restricts imports.
Hamid Zadboom, head of the Iran Trade Promotion Organization, said that since March 2019, 800 goods have been added to Iran’s prohibited import list, bringing the total number of prohibited goods to 2,400.
According to the latest data on the country’s manufacturing activity released by Iran’s Ministry of Industry, Mines and Trade, during the 11-month period from March 20, 2020 to February 18, 2021, Iran’s main manufacturing industry The output of products, including household appliances, automobiles, steel and cement, increased steadily year-on-year. Among them:
Automobile production increased by 18.4% year-on-year;
The production of televisions, washing machines and refrigerators soared by 50%;
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Steel production increased by 7% year-on-year;
Cathode copper production increased by 16.7%;
Aluminum production surged 56%;
Cement production increased 12.5% year-on-year;
Coal concentrate production increased 1.9%;
Glass production increased by 2.4% year-on-year;
Acrylic fiber production increased by 293%;
Petrochemicals maintained steady growth of 9.4%.
According to the Iranian Ministry of Industry, Mining and Trade news website Shata reported that in the 11.5 months as of February 3, Iran banned the import of 1,539 unnecessary products and restricted the import of 722 items, saving Iran $5.8 billion.
From January to December 2020, the economic and trade volume between China and Iran was US$14.91 billion. In 2020, China exported US$8.51 billion in goods to Iran, down 11.3% from US$9.59 billion in the same period last year; China imported US$6.4 billion in goods from Iran, down 52.4% from US$13.44 billion in the same period last year.
According to a spokesman for the Islamic Republic of Iran Customs Administration (IRICA), Iran imported 21.4 million tons in the first 11 months of the current Iranian calendar year (March 20, 2020 to February 18, 2021) Basic commodities, worth $10.84 billion.
According to Rouhollah Latifi, corn was the largest imported commodity during the above-mentioned time period, with imports of 9.125 million tons. In addition to corn, imported cereals, oilseeds, barley, unprocessed vegetable oil, soybean meal, wheat, fertilizers, paper, medical equipment, pharmaceuticals and raw materials are also imported in large quantities. The largest commodity is barley, with an import volume of 1.702 million tons, worth US$422.1 million.
03. IMF agency forecast
According to a report by the Tehran Times on April 7, the International Monetary Fund (IMF) in its latest “World Economic Outlook” “, Iran’s GDP is forecast to grow by 2.5% in 2021, an increase of 1% from 1.5% in 2020.
In a report released in October 2020, the IMF expected Iran’s real GDP to grow by 3.2% in 2021. Data in the IMF report shows that Iran’s GDP growth has exceeded that of West and Central Asia.
The IMF believes that Iran’s inflation rate will reach 36.5% in 2021, an increase of 1.9% from 34.6% in 2019, and will drop to 27.5% in 2022. The country’s current account balance accounted for 0.7% of the country’s GDP in 2020 and is expected to climb to 1.2% in 2021.
At present, the domestic epidemic situation in Iran is serious and the economic situation is grim. Foreign traders who have Iranian customers are asked to keep in touch with their customers, pay attention to the collection risks, and pay close attention to market changes. </p
