The welfare of Iranians is decreasing every day compared to yesterday.
The welfare of Iranians is decreasing every day compared to yesterday.
The Statistical Center of Iran has published a report on the per capita national net income from the years 1390 to 1402. This report presents the per capita income statistics based on current prices and constant prices with the base year of 1400. These statistics show the average income registered by each Iranian in recent years.
Calculating these statistics with constant prices can somewhat reflect the income of each Iranian without the impact of inflation and depict the changes in household welfare. Studies show that these statistics have significantly improved in some years due to political developments. In 1394, the per capita income of Iranians reached its lowest level during this period. However, as there was hope for the lifting of sanctions and the inflation rate was decreasing in those years, Iranian households seemed to be less economically dissatisfied.
In 1396, after the implementation of the JCPOA, the per capita income grew significantly and even approached the levels of 1390. However, in the following years and after abandoning the nuclear agreement, the per capita income also decreased, and this downward trend continued until 1399.
Although conditions have slightly improved due to the reduction in the pressure of sanctions, there is still a significant gap compared to the early 2010s. Monitoring these developments shows that Iranians’ per capita income in the past 13 years has fluctuated due to the intensity of sanctions and oil revenues. Therefore, any move towards improving the country’s diplomatic conditions in the coming years will reflect its impact on the tables. And any step towards intensifying sanctions and darkening international relations will evaporate the welfare of Iranian households.
Decline in Iranian Welfare
The Iranian Statistical Center recently published statistics on the national net income per capita until 2023. The situation of national net income per capita in 2023 has decreased by 20% compared to 2011. Studies show that this index has experienced significant ups and downs between 2011 and 2023. For example, in 2017, after the JCPOA was reached, the national net income per capita was able to have the smallest gap with 2011, which was the highest value during this period.
On the one hand, in 1399 when the economic conditions of the COVID era have been added to the sanction conditions, the per capita national net income has registered a significant decrease. Analyzing the trend of this index shows that political openings can have a considerable impact on increasing welfare. Per capita income is an economic indicator that shows the average income per person in a country. This index is obtained by dividing the total national income by the country’s population.
Per capita income can provide an overall picture of a country’s economic situation and is usually used to compare the level of welfare and economic development among different countries. This indicator somewhat reflects the level of welfare development of the people, so the higher this figure is, the better the level of economic welfare and higher purchasing power of the people.
This index is largely indicative of the well-being and amenities enjoyed by the citizens of a country as a result of economic growth. However, the income per capita index does not reflect everything about income distribution and inequalities, and it may conceal income inequalities because it is only an overall average and does not specify the actual income distribution among different individuals. The net national income index calculated by the Statistical Center is obtained by deducting the figure of capital consumption from the national income.
The declining trend of income per capita
According to statistics published by the Statistical Center of Iran, the net national income per capita at constant prices was 110 million and 500 thousand tomans in 1390. In 1391, concurrently with the start of the first round of economic sanctions against Iran, this index significantly decreased compared to 1390 and reached 92 million and 200 thousand tomans. The negative shock of the sanctions on Iran’s economy was not limited to just that year, and the declining trend of net national income per capita continued until 1394.
In 1395, with a relative reduction in sanctions and an increase in oil sales, the net national income per capita increased. However, these conditions were not sustainable, and the negative effects of the possibility of a second round of sanctions in late 1396 and their implementation in early 1397 once again hit the downward trend of net national income per capita. As a result, in 1399, due to the intensification of sanctions and the onset of the COVID-19 pandemic, one of the lowest levels of net national income per capita was recorded for the country’s economy.
In 1400, with the improvement in conditions resulting from the pandemic, increased oil sales, and utilizing the country’s production capacities, some improvement was achieved, and the net national income per capita faced an increase compared to 1399. However, during the years 1400 to 1402, the net national income per capita did not show significant growth and even has a significant gap compared to the net national income per capita in 1390, as the net national income per capita in 1402 only makes up 80% of the net national income per capita in 1390.
In other words, Iran’s economy has not been able to recover the per capita net national income decline in the 2010s. The world of economics also compared Iran’s per capita income with neighboring countries based on statistics provided by the Central Bank. However, the economic growth statistics from the Central Bank and the Statistical Center of Iran are somewhat different.
The findings of this report indicate that Iran’s per capita income has shown a significant gap compared to its neighbors. For example, Iran and Turkey had similar per capita incomes at current prices and based on purchasing power parity in 2011, but they have followed different paths since then. By the end of 2022, Iran’s per capita income had decreased by about 4% compared to 2011, while Turkey’s per capita income had increased by 95% in the same period. These divergent trends have led to Turkey’s per capita income being almost twice that of Iran’s in 2022.
The necessity of policymakers paying attention to international requirements.
Considering that sanctions seem to have been a significant reason for the recent decline in per capita national net income, policymakers’ attention to international developments is crucial. Some analysts believe that political interactions should be conducted in a way that international political developments and reasons for imposing harsher sanctions and increased economic pressures on the country do not occur. As a result, a decrease in per capita income and a decline in welfare do not happen.
Therefore, it is essential for policymakers to include strategies to counter sanctions in their agenda alongside domestic reforms and utilizing economic capacities to prevent potential negative impacts and place the country’s economy on a path of sustainable growth.
