Iran: Domestic economy falters further as citizens wait for sanctions to lift

Iranian citizens are refusing to spend much money these days, in anticipation of imminent sanctions relief that will spur a decrease in domestic prices. Ironically, this is the opposite effect on the economy that everyone had anticipated for Iran, at least in the short term. In particular, the automotive sector has seen far less purchasing month on month since the announcement of the deal in July. Iran’s people are riding high on the expectation that prices will drop with the arrival of quality imported goods. Iranian car sales, steelmaking, and associated industries have seen far fewer profits.

Additionally, plunging oil prices have strained the government’s budget, but has not slowed down spending, as they are hoping for the unfreezing of tens of billions of dollars in assets held in overseas banks that have been inaccessible thanks to sanctions. With economic consumption declining on the hopes that Western firms will enter the Iranian market, everything from retail, gas, capital goods, and food have seen less purchasing.

The main point of contention on the implementation of the nuclear accord on the Iranian side is the sanctions relief schedule, which most Iranian officials were expectant that sanctions would be lifted immediately, while Western lawmakers want sanctions to be lifted incrementally in accordance with steps taken to comply on the nuclear weapons program surveillance and dismantling of centrifuges.

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