Containing corruption key to Iran’s economic recovery

Iran is faced with very difficult choices in its current struggle to contain the health and economic fallout from COVID-19. There’s no doubt that unemployment remains the government’s key concern, and to get people back to work, authorities are prepared to accept public health risks. In fact, to underline the dimensions of the challenge, on April 11 government spokesman Ali Rabiei stated that a long-term lockdown would leave 4 million Iranians unemployed.

That explains why some economic activities are starting up again, despite warnings that a second wave of infections could be expected.

Though returning the economy to a degree of normalcy is a top priority, the government is only one stakeholder in Iran’s complex political and economic structures, which adds to the current pandemic-related unpredictability. Other stakeholders, especially major power centers with economic interests — the Islamic Revolutionary Guard Corps, the military, semi-state institutions and clerical organizations, for example — and the private sector also play important roles in reviving the economy.

The latest International Monetary Fund (IMF) report on Iran confirms the economy’s negative trajectory, predicting that gross domestic product will experience a 6% decline in 2020. This follows a contraction of 4.9% in 2018 and 7.6% in 2019. While the ultimate extent of economic decline in 2020 will depend on how long the current crisis continues, the IMF does predict that the Iranian economy will experience growth of 3.1% in 2021. This forecast has surprised many people, especially considering the multiple crises Iran faces such as sanctions, COVID-19 and low oil prices. Yet it is conceivable that the economy will have the potential to grow after three years of decline and gradually restore some lost ground, especially if the current crises compel the government to introduce needed structural reforms.