The Forum for Partners in Iran's Marketplace

October 2022, No. 101


Inflation the Worst Cancer for Economy

The current inflation is like a termite slowly and noiselessly eating the basic pillars of the economy and the society.

Probably the most malignant cancer of any economy is inflation; it is a difficult disease that has many complications and its worst feature is that the doctor is not interested in treating the patient because it has benefits for him.

By creating inflation, which is caused by monetary policies, the government covers its inability to balance the budget and provide resources, and compensates its deficits and creates inflation with oppressive and unauthorized taxation. The only institution that can curb and control inflation is itself, so it is natural if inflation is not treated. In the past 44 years, only four years of single-digit inflation have been seen in Irans economy. That is not due to a balanced budget and the control of a Central Bank independent of the monetary policy, which has been achieved as a result of creating an atmosphere of hope in the society and opening the oil arteries and suppressing the exchange rate with the help of petrodollars.

The year 1400 (2021 2022) ended with over 40% inflation and the outlook for 1401 does not show a better figure than this. Previously, the International Monetary Fund had predicted Irans inflation rate at 32.3% for 1401 and 27.5% for 1402, which is probably an almost optimistic assumption of a possible agreement between Iran and the West, or at least reducing the pressure of sanctions in this regard.

The prediction has been effective. But now that we have entered the third half of the third month of the year, the status of the agreement and revival of the JCPOA has become extremely unclear, and the European countries, along with the United States, have again brought the Iran nuclear case to the International Atomic Energy Agencys Board of Governors. The things that make the agreement more out of reach and add to the sufferings of Irans economy also fuel the inflationary expectations in the society.

All these events are taking place while the shoulders of households, companies and the entire economy of Iran are bent under the pressure of inflation and there is no strength left to bear more. These last funds should be spent on helping to reduce the burden of this pressure, which can be achieved by agreeing and removing the embargo as an external factor and reforming the budget internally.

The current inflation is like a termite slowly and noiselessly eating the basic pillars of the economy and the society. The continuation of inflation is like moving towards the destruction of these foundations and the collapse of the economy; the calamities that have befallen nations like Venezuela and the sufferings the people of this country have gone through are before the eyes of our policy makers. Inflation is now a strong wind that has the power to become a destructive storm that uproots and carries away everything.


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