The Welfare of Iranians Declines Every Day
The Welfare of Iranians Declines Every Day
The Statistical Center of Iran has published a report on the per capita net national income from the years 2011 to 2023. This report presents the statistics of per capita income at current prices and constant prices with the base year of 2021. These statistics show what average income each Iranian has registered 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. Studies show that these statistics have seen significant improvements in some years influenced by political developments. In 2015, the per capita income of Iranians reached its lowest during this period, but since there was hope for the lifting of sanctions and inflation rates were decreasing in those years, it seemed that Iranian households felt less economic dissatisfaction.
In 2017, after the implementation of the JCPOA, the per capita income grew significantly and even approached the level of 2011. However, in the following years, after abandoning the nuclear agreement, the per capita income situation also declined, and this downward trend continued until 2020.
After that, although conditions slightly improved due to reduced sanction pressures, there is still a significant gap compared to the early 2010s. Monitoring 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, any movement towards improving the country’s diplomatic conditions in the coming years will reflect on the tables, and any step towards intensifying sanctions and deteriorating international relations will evaporate the welfare of Iranian households.
The Decline of Iranian Welfare
The Statistical Center of Iran recently published statistics on the 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. Studies show that this index has experienced many ups and downs during the 2011-2023 period. For instance, in 2017, when the JCPOA was achieved, the per capita net national income had the least distance from 2011, which was 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 per capita net national income registered a significant decrease. Reviewing the trend of this index shows how political openings can be effective in increasing welfare. The 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 is, in fact, the fruit of economic growth. However, the per capita income index does not show everything about income distribution and inequalities and may conceal income inequality because it is only an overall average and does not specify the actual income distribution among different individuals. The net national income index, which the Statistical Center calculates, is obtained by subtracting the fixed capital consumption figure 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 was at 110 million and 500 thousand tomans in 2011. 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 the sanctions to Iran’s economy was not limited to that year alone, and the decline in per capita net national income continued until 2015.
In 2016, with the relative reduction of sanctions, improvement in international conditions, and increased oil sales, the per capita net national income increased. However, these conditions did not remain stable. The negative effects resulting from the possibility of imposing a second round of sanctions in late 2017 and their implementation in early 2018 once again marked a downward trend in the 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 production capacities, the country’s economy was able to improve to some extent, and the per capita net national income increased compared to 2020. However, during the years 2021 to 2023, the per capita net national income has not had much upward movement and is still significantly distant from the per capita net national income in 2011, such that the per capita net national income in 2023 constitutes only 80% of the per capita net national income in 2011.
In other words, Iran’s 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.
Findings of this report showed that the per capita income of Iran’s economy has found a significant distance 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 followed 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% during the same period. These two different trends have caused Turkey’s per capita income in 2022 to be almost double that of Iran’s.
The Need for Policymakers to Pay Attention to International Requirements
Given that sanctions seem to be one of the main reasons for the declining trend of per capita net national income in recent years, it is crucial 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 harsher sanctions and more economic pressures on the country, and as a result, a reduction in per capita income and welfare does not occur.
Therefore, it is essential for policymakers to incorporate strategies to counter sanctions alongside domestic reforms and the use of economic capacities to prevent potential negative impacts and place the country’s economy on a path of sustainable growth.
