Iran's economic challenges are not limited to inflation, and there are multiple obstacles facing producers. While some officials of the thirteenth government refer to inflation as the main problem of the economy, the reality is that businesses are facing energy imbalances, credit constraints, a decline in domestic demand, and foreign trade restrictions.
Obstacles Beyond Prices
Experts believe that these obstacles have limited production capacity and weakened the incentive for investment. For example, if a producer can purchase raw materials at a lower price, but their production line is halted due to a lack of electricity and gas, the decrease in raw material prices cannot lead to an increase in production. Issues such as power outages, energy imbalances, and transportation disruptions all affect the performance of producers.
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Economic Consequences
Aria Sadegh-Neyat Haghighi, the head of the Industry Commission of the Iran Chamber of Commerce, has stated that inflation is merely one of the signs of a series of economic flaws that can lead the economy into a vicious cycle. The continuation of this situation can lead to a decrease in people's purchasing power and a decline in demand, ultimately resulting in economic recession.
The decrease in household purchasing power not only affects the consumer market but can also lead to increased unemployment and the expansion of poverty. This situation, in turn, can undermine social security. Thus, economic problems gradually spread from the production and market sectors to other parts of society.
Sadegh-Neyat Haghighi has also emphasized the importance of the relationship between economic recession and household livelihoods, stating that recession can weaken the investment outlook. When businesses face a decline in demand and sales limitations, the incentive for new investment and the development of production capacities decreases. This situation can, in turn, lead to a limitation of growth and economic development capacity.
Ultimately, it seems that the continuation of this cycle could jeopardize public welfare and community security. From this perspective, describing the economic situation solely as inflation does not reflect all dimensions of the problem. Structural issues and existing obstacles must be considered alongside prices to provide appropriate solutions for addressing the economic crisis.
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