Iranian economist says Pezeshkian cannot improve economy amid sanctions

Some of the most frequently voiced expectations for President-elect Masoud Pezeshkian include curbing inflation, tackling unemployment, easing Internet access, and eliminating heavy-handed enforcement of compulsory hijab.

However, despite the people's and businesses' priority of addressing economic problems, Iranian economist Morteza Afqah from the University of Ahvaz says no significant economic breakthrough is expected in the near future. Afqah warned that opponents of the new government might obstruct economic developments, hoping that the "bitter experience" of hardliners blocking economic reforms under reformist President Mohammad Khatami (1997-2005) will not recur during Pezeshkian's administration.

Speaking to Fararu website in Tehran, Afqah emphasized that while the focus is on the new government's cabinet choices, it's equally important to carefully select local provincial officials, as a significant part of national production occurs in the provinces. He added that a competent executive team could activate unused potentials and solve 20 to 30 percent of the country's economic problems.

Afqah criticized the Raisi administration for having one of Iran's worst economic teams, describing the "difficult situation" as a combination of severe sanctions and a lack of financial resources, with very little hard currency in the foreign currency reserve fund.

This situation persists, and the nation's hope lies in Pezeshkian's potential to initiate a new round of talks with the United States to lift some sanctions. Afqah noted that developments in the United States could also impact Iran's markets. Iran’s political establishment fears the return of Donald trump, expecting tougher sanctions and more isolation.

Another Iranian website, Rouydad24 pointed out that as the likelihood of Donald Trump's election as the next US President increases, the it gives rise to expectations about higher inflation in Iran. However, the website's writer Amir Hossein Jafari opined that only a moderate president in Iran can tackle this challenge. Jafari added that many in Iran believe that Trump is man who can make a deal that would lead to a reduction in Iran’s inflation rate and reduction of the sanctions against Iran.

Trump has stated in recent years that he could make a deal with Iran. However, it is doubtful that Iranian officials, particularly Supreme Leader Ali Khamenei, would overlook their pronounced enmity towards Trump after he ordered the killing of former IRGC Quds Force Commander Qasem Soleimani. Earlier this week, media reported that US security officials raised alarms about possible plots against Trump by Iranian agents in the United States.

Rouydad24 also quoted Afqah saying that Iran's next government could curb inflation expectations through diplomacy. However, the question remains: Will Khamenei and other hardliners stay silent if Pezeshkian attempts rapprochement with the United States, and is Pezeshkian capable of pursuing such diplomacy for Iran?

The media have also quoted Republican Vice-Presidential nominee J.D. Vance discussing a tough approach to Iran. However, the next US administration's priority is likely to be addressing the war in Ukraine, with the Iran issue potentially coming later.

Meanwhile, both the media and economists in Iran are pessimistic about the further rise in the inflation rate, estimated to be around 50 percent in the absence of transparent statistics. As Afqah points out, "Pezeshkian cannot make any change in this situation if sanctions are not lifted."