Iran’s damaged economy is facing a slow recovery as a fragile ceasefire with the United States comes under fresh pressure from new attacks in the Gulf and southern Iran.
Three weeks after Iran and the United States signed a memorandum of understanding to extend a ceasefire, three tankers have been hit in the Strait of Hormuz over the past two days. The US military launched large air attacks on Iran’s southern provinces on Wednesday, while Iran’s Islamic Revolutionary Guard Corps and regular army fired missiles and drones at US interests in Bahrain and Kuwait.
Both sides accused the other of breaching last month’s understanding. Mediated talks are expected to resume next week after the funeral of Iran’s Supreme Leader Ayatollah Ali Khamenei.
The fighting has landed on an economy already under pressure from sanctions, local mismanagement, corruption, protests and internet shutdowns. Data from Iran’s Statistical Center showed inflation in Khordad, the Persian calendar month that ended on June 21, was 88.6 percent higher than a year earlier.
Food prices have hit households harder. The same official data showed food inflation at almost 134 percent, with oils and fats rising by more than 278 percent and meat and poultry by more than 178 percent.
Mahdi Ghodsi, a senior economist at the Vienna Institute for International Economic Studies, said some layoffs in services, retail, transport, construction and small businesses could be reversed if transport, energy, payments and internet access stabilise, Aljazeera reported.
But he said deeper industrial damage would take longer to repair. For damaged factories, he said, “reopening is not simply a matter of returning to normal.”
President Masoud Pezeshkian has warned that public anger could return to the streets if hardship deepens. “What I fear is that we fail to serve the people right,” he said.
