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Business Is Finished: Iranian Merchants Fear the Worst as Virus Spreads

Iranian merchants plying the busy Strait of Hormuz between Dubai and Iran fear their next trip home will be a one-way trip after the United Arab Emirates banned ferry services to prevent the spread of coronavirus.

“Business is finished,” said Iranian trader Morad as he stacked goods on a small wooden dhow this week destined for the Iranian port of Bandar Abbas some 230 km (140 miles) away.

Iran, which has emerged as an epicenter for the disease that originated in China, is already grappling with economic hardship as U.S. sanctions curb oil and gas exports crucial for government revenues.

Now its non-oil trade, which the International Monetary Fund had estimated would be about $40 billion in 2020—or nearly 10 percent of its economy—is under threat just weeks after mass protests against the government over economic hardships were crushed.

Several countries in the region have suspended flights to Iran and neighboring Iraq has closed its land border, worsening the Islamic Republics economic isolation since Washington reimposed sanctions in 2018.

Epoch Times Photo
Epoch Times Photo
Iranian fire fighters and municipality workers disinfect a street in the capital Tehran for corona virus COVID-19 on March 5, 2020. (Stringer/AFP via Getty Images)

Indefinite restrictions on trade and tourism, particularly with Irans main trading partners China and Iraq, could lead to a deeper economic contraction.

“Exporters in general will be impacted, big ones that are exposed to China, which may slow down for some time, and smaller ones that are exposed to the borders shutdown,” said Maciej Wojtal, fund manager at Amtelon Capital, an asset management firm which invests in Iranian stocks.

The dhows that line Dubai Creek are piled precariously high with fridges, televisions, rice, and sugar destined for Iran—and usually return laden with goods such as spices and plastics.

“Ill go there, and I dont know when I will be back, one month, three months?” Morad said before setting sail for Iran. “I have a small business there, maybe Ill do some fishing.”

Whos Going to Buy It?

The IMF, which estimates the Iranian economy shrank 9.5 percent last year, had expected it to stabilize this year—before the coronavirus crisis escalated.

The number of virus deaths in Iran hit 107 on March 5, putting it on a par with Italy as the country with the highest death toll outside China. President Hassan Rouhani said on March 4 the virus had affected almost all of Irans provinces.

Garbis Iradian, chief economist for Middle East and North Africa at the Institute of International Finance (IIF), told Reuters he had cut his forecast for Irans gross domestic product because of the outbreak.

Iradian had been expecting the Iranian economy to contract 2 percent in 2020 but hes now forecasting it will shrink 3.1 percent.

“Lets say, hypothetically, I managed to import furniture, who is going to buy it inside Iran?,” said Farhad, a 53-year-old businessman from Tehran who buys furniture from China. “All shops are closed. All sectors face the same problem.”

CORONAVIRUS-IRAN-ECONOMY
CORONAVIRUS-IRAN-ECONOMY
A dhow loaded with goods bound for Iran is seen along the creek in old Dubai, United Arab Emirates, on March 2, 2020. (Christopher Pike/Reuters)

Irans rial currency plunged last week, which could accelerate inflation running at nearly 40 percent last year.

Iradian said continued curbs on trade and tourism could see the inflation rate spike above 50 percent and unemployment rise over 20 percent of the labor force. The unemployment rate for Iranians aged 18–35 is 17.9 percent, according to official figures published by the Statistical Center of Iran in December.

Sustained cuts to exports may push the government to slash spending—a move analysts think could lead to further social unrest, following protests last year over fuel price rises.

The demonstrations, which called for the overthrow of the government and Supreme Leader Ali Khamenei, were met with a crackdown that killed hundreds and put thousands in jail.

Many Iranians, already angry about economic hardship, say they are worried the countrys clerical rulers have not got a firm grip on the coronavirus illness.

Some critics accused the authorities of initially concealing the outbreak to secure a high participation in state-organized rallies. Others suggested it was to ensure a high turnout in Feb. 21 parliamentary polls. A government spokesman rejected the accusations, saying the outbreak should not be politicized.

Complete Lockdown?

The United Arab Emirates, traditionally a major re-export hub for Iran, has imposRead More – Source

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