Economic Recession in Iran’s Pre-Holiday Market Amid Coronavirus

Iranian media described the worst days of the holiday market as the current market slump resulting from the coronavirus outbreak. Market activists demanded exemption from taxes and municipal fees. Several experts said the coronavirus recession has not yet reached Iran.

It’s hard to believe but it happened. Corona originated in Wuhan, China and airlines thousands of kilometers away were grounded. Stock markets collapsed. Tourists stayed home and hotels became empty. Employees worked remotely and the world’s economy gasped for breath, like Iran’s pre-holiday markets for Iranians.

The economic damages from the spread of coronavirus have not only affected China’s economy but also damaged the chain of the global economy. Iran’s economy, in one corner of this chain, alongside sanctions and FATF blacklist listing, will now become more turbulent with the spread of coronavirus.

“The Worst Days of the Holiday Market”

The state newspaper “Iran” in a field report reflected some of the concerns of the pre-holiday market and wrote that with the peak of the coronavirus outbreak, many businesses have faced challenges and recession, and after months of waiting to reach a thriving pre-holiday business, they are now more worried than ever.

The spread of coronavirus has caused most people to stay home instead of strolling on sidewalks and the always crowded streets and shopping in the diverse pre-holiday markets. According to “Iran,” the continuation of this situation has caused market activists to “spend the worst days until evening.”

Activists in various businesses, in interviews with the newspaper’s reporter, asked the government to exempt them from paying taxes and municipal fees given the market slump in the month of Esfand, and instead to be able to use banking facilities.

The Central Bank’s public relations announced conditions yesterday for obtaining banking facilities and at the same time emphasized that business owners who have suffered income reduction and financial problems due to the spread of coronavirus, as well as bank debtors, have until the end of Shahrivar 99 to make cash payments on their debts.

Sleeping Customers, Destroyed Market and Abundant Taxis

Domestic Iranian media in similar reports on the recession of the pre-holiday market refer to self-employed businesses, some of whom have rented shops but with a sharp decline in income, cannot afford to pay rent, water, electricity and other costs.

IRNA considered the continuation of this situation crisis-prone and causing “an increase in bankruptcies” and wrote that coronavirus has put the entire market under pressure. From hairdressers, florists, street vendors to seasonal workers and internet businesses, everyone is caught in market recession.

Internet taxis these days are searching for customers on empty streets with little traffic. This is while in previous years, these customers were the ones who had to wait for a moment to catch regular and internet taxis.

One online food sales manager said that due to the spread of coronavirus in recent days, he has experienced the lowest amount of food orders. He added that due to people’s fear of contracting coronavirus, the number of orders has decreased and now he and other colleagues don’t know what to do.

Cancellation of Tourism Tours

Domestic media during the spread of coronavirus, to some extent with open hands and without referring to governments’ responsibility in times of crisis, wrote that the scope of closures extends from cinema halls, concerts, theaters and the bankruptcy of the hotel and tourism industry to the closure of restaurants, halls, travel agencies and cafes, and their customers have also decreased significantly.

This is a chain whose thread leads to the tourism industry. The Ministry of Cultural Heritage, Handicrafts and Tourism on the sixth of Esfand in a circular, while announcing “cancellation of travel and special conditions,” obligated travel service offices to return the amounts received from tourists and travelers who withdrew from Nowruz trips “without any penalty.”

Earlier, Haram Rafi’ei, chairman of the board of the Association of Travel Service and Airline Offices in Iran, had reported an increase in the number of cancellations of travel by train, airplane and registration in tours and hotels.

The newspaper “Hamshahri” also wrote about the silence of hotels in the cities of Qom and Mashhad. Similar conditions are now observed in many cities in the north and south of the country that are destinations for domestic tourists, so much so that the airline companies association said that the responsibility for paying compensation for flight cancellations due to the spread of coronavirus rests with the airlines.

Coronavirus Economic Crisis on Its Way to Iran

Fear of the spread of coronavirus caused many neighboring and non-neighboring countries of Iran to close their borders to Iranian travelers and not allow their citizens to travel to Iran. Turkey, Afghanistan, Iraq, Pakistan and Armenia are among these countries. Earlier, Ali Rabiei, the government spokesman, said that closing Iran’s borders with neighbors would cause irreparable damage to the country’s economy.

Closing borders and imposing restrictions on imports and exports affect Iran’s market at both micro and macro levels; an issue that experts warn about.

Hamid Mirmoeini, an economics expert, told IRNA that in critical conditions caused by the coronavirus, businesses that are largely service-based suffer the most damage, and businesses such as retail, household appliances, hotels and even clothing, due to a sharp drop in demand, experience recession.

Mr. Mirmoeini, noting that the economic consequences of economic crises have not yet reached Iran, said that this “recession reaches other sectors of the economy and the entire national economy with a delay.”

IRNA also quoted Zahra Karimi, an economics expert, as saying that the outbreak of the coronavirus crisis increases the share of informal employment in Iran’s economy and the Iranian government has “little room for maneuver” to deal with the negative effects of this crisis. Ms. Karimi’s reference to maneuvering room is the financial capacity of governments like China and Japan that can compensate for some of the damage to businesses. However, the Iranian government, due to financial constraints resulting from sanctions limitations and placement on the FATF blacklist, can hardly afford the current costs of the country.

Source: DW