There is no doubt that the current coronavirus crisis will undermine the Iranian economy and lead to a major contraction in the country’s gross domestic product. Some early estimates project a contraction of up to 3%, though it is too early to offer a reliable assessment. The Iranian government has already announced a number of measures to support vulnerable social classes as well as businesses that will be hit hard by the current economic downturn. Yet with the government itself heavily burdened by budget deficits, external sanctions, mismanagement as well as a collapse in the global oil price — what impact will these measures have?

Evidently, the very first challenge in designing and implementing the right stimulus to Iranian businesses is the fact that the government itself is the largest economic player in the country as opposed to being the regulator of economic sectors. This means that direct stimuli such as bailouts will mainly refer to major state or semi-state companies and defeat the actual purpose.

Consequently, the focus of the government is elsewhere. It has identified a number of sectors to which some financial assistance will be offered, though the actual support remains ambiguous. According to the Central Bank of Iran, all commercial banks in the country have been instructed to extend low interest loans to the 10 business categories that are most affected by the COVID-19 virus outbreak, i.e., restaurants, shops selling dried nuts, confectionary and similar products, tour and travel agencies, hotels and hospitality firms, transportation companies, airlines, textile companies, manufacturers of leather products, sports and entertainment centers, and event organizers.

At the same time, Ebrahim Dorosti, deputy head of the Chamber of Guilds, believes that the government should not only focus on specific sectors and should offer stimuli to all businesses. Dorosti also predicts that the main economic fallout of the current crisis will be visible in three months.