WHAT is the likely economic impact in Iran?
Iranians have already been feeling the impact of the collapse of the rial, the country’s currency. In May, after United States President Donald Trump announced the withdrawal from the nuclear deal, it fell to its weakest position against the dollar in history. It has now lost more than 80 percent of its value since April.
Recently many Iranians, angry at high inflation and the increasing economic hardship, have been protesting across their country. State news and social media posts have reported demonstrations in several cities.
As the currency weakens, investors have been seeking to protect their wealth via physical assets such as gold bars and coins, demand for which has soared in recent days. There are predictions that this will lead to profiteering, and already there have been reports of arrests.
Analysts say the sanctions have hit ordinary people massively via shortages of daily essentials and equipment, while a mushrooming black market has brought exorbitant prices. Although the sanctions will target food and medicine directly, Iran will be cut from the international financial system, so imports will be affected, causing delays in delivery. People who might otherwise live normal lives with the aid of their medications will needlessly die.