The Welfare of Iranians Declines Daily
The Welfare of Iranians Declines Daily
The Statistical Center of Iran has published a report on the per capita net national income from 2011 to 2023. This report presents statistics on per capita income at current prices and constant prices with 2021 as the base year. These statistics indicate what the average income of each Iranian has been in recent years.
Calculating these statistics at constant prices can reflect a narrative of each Iranian’s income without the effect of inflation and depict changes in household welfare. Investigations show that these statistics have seen significant improvement in some years due to political developments. In 2015, the per capita income of Iranians reached the lowest level during this period, but since there was hope for the lifting of sanctions and inflation rates were on a declining trend in those years, Iranian households seemed to feel less economic dissatisfaction.
In 2017, after the implementation of the JCPOA, per capita income grew significantly and even approached the levels of 2011. However, in the following years, after the abandonment of the nuclear agreement, the per capita income situation also declined, and this declining trend continued until 2020.
After that, although conditions slightly improved due to reduced sanction pressures, there is still a significant gap compared to the beginning of the 2010s. Observing these developments shows that the per capita income of Iranians over the past 13 years has fluctuated under the influence of the intensity of sanctions and oil revenues. Therefore, in the coming years, any move towards improving the country’s diplomatic conditions will reflect in household tables, and any step towards intensifying sanctions and darkening international relations will result in the evaporation of Iranian household welfare.
The Decline of Iranian Welfare
The Statistical Center of Iran has recently published statistics on per capita net national income up to 2023. The state of per capita net national income in 2023 has decreased by 20% compared to 2011. Investigations indicate that this index has experienced many ups and downs during the period from 2011 to 2023. For example, in 2017, when the JCPOA was enacted, per capita net national income managed to have the smallest gap with 2011, which is the highest amount during this period.
On the other hand, in 2020, when the economic conditions of the Corona era were added to the sanction conditions, the figure for the country’s per capita net national income recorded a significant decrease. Examining the trend of this index shows how political openings can be effective in increasing welfare. Per capita income is an economic indicator that shows the average income of each individual in a country. This index is obtained by dividing the total national income by the country’s population.
Per capita income can provide a general picture of a country’s economic situation and is usually used to compare the level of welfare and economic development between different countries. This index, as one of the development indicators, somewhat shows the level of people’s welfare, such that the higher this figure, the better the economic welfare level and the higher the purchasing power of the people.
This index largely indicates the citizens’ enjoyment of welfare and facilities and, in fact, the fruit of economic growth. However, the per capita income index does not show everything about income distribution and inequalities and may hide income inequality because it is only an overall average and does not specify the actual distribution of income among different individuals. The net national income index, calculated by the Statistical Center, is obtained by subtracting the figure for fixed capital consumption from the national income.
The Downward Trend of Per Capita Income
According to statistics published by the Statistical Center of Iran, the per capita net national income at constant prices in 2011 was at the level of 110 million and 500 thousand tomans. In 2012, coinciding with the start of the first round of economic sanctions against Iran, this index faced a significant decrease compared to 2011 and reached 92 million and 200 thousand tomans. The negative shock of sanctions on Iran’s economy was not limited to that year alone, and the downward trend of per capita net national income continued until 2015.
In 2016, with the relative reduction of sanctions, improvement in international conditions, and increased oil sales, per capita net national income increased. However, this condition did not remain stable. The negative effects resulting from the possibility of imposing the second round of sanctions in late 2017 and their implementation in early 2018 again caused a downward trend in per capita net national income. As a result, in 2020, due to intensified sanctions and the onset of the Corona pandemic, one of the lowest levels of per capita net national income for the country’s economy was recorded.
In 2021, with the improvement of conditions resulting from the Corona pandemic, increased oil sales, and utilization of the country’s productive capacities, the economy was able to somewhat improve, and per capita net national income increased compared to 2020. However, during the years 2021 to 2023, per capita net national income has not shown much upward movement and is still far from the per capita net national income of 2011, such that the per capita net national income in 2023 constitutes only 80% of the per capita net national income of 2011.
In other words, the Iranian economy in recent years has not even been able to compensate for the decline in per capita net national income in the 2010s. The World of Economy, in a report, also compared Iran with neighboring countries based on the per capita income statistics announced by the Central Bank. However, the economic growth statistics of the Central Bank and the Statistical Center of Iran are somewhat different.
The findings of this report showed that the per capita income of Iran’s economy has significantly diverged compared to its neighbors. For example, the per capita income of Iran and Turkey at current prices and based on the purchasing power parity method in 2011 was almost at a similar level, but after that, they took different paths. By the end of 2022, Iran’s per capita income had decreased by about 4% compared to 2011, while Turkey’s per capita income increased by 95% over the same period. These two different trends have resulted in Turkey’s per capita income being almost twice that of Iran’s in 2022.
The Need for Policymakers to Pay Attention to International Requirements
Given that sanctions seem to be one of the important reasons for the downward trend in per capita net national income in recent years, it is important for policymakers to pay attention to international developments. Some analysts believe that political interactions need to be conducted in such a way that international and regional political developments do not lead to the imposition of more severe sanctions and greater economic pressures on the country, and as a result, a decrease in per capita income and welfare does not occur.
Therefore, it is essential for policymakers to, alongside domestic reforms and utilizing economic capacities, also put strategies to counter sanctions on their agenda to prevent potential negative impacts and ensure the country’s economy is on a path of sustainable growth.