Iranian former central bank adviser challenges Trump’s claim of economic collapse
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A former adviser to Iran’s central bank said the economy is under strain but not collapsing, while warning that the UAE’s trade halt could push contraction to around 5% this year.
A former adviser to Iran’s central bank said the country’s economy is deteriorating under sanctions but is not on the brink of collapse. Mehrdad Sepahvand, now director of Daric Investment Group, told CNBC that shops remain stocked and there has been no panic buying, and that confidence in the banking system has not collapsed despite cyberattacks and banking imbalances.
Sepahvand warned that the United Arab Emirates’ decision to end all trade and financial ties with Iran could deepen the contraction to about 5% this year, stressing that the UAE had been a major gateway for Iranian imports. He said the move would pressure the exchange rate, raise trade costs and fuel inflation.
The United States has intensified pressure on Iran, with President Donald Trump announcing “economic warfare and isolation on an unprecedented scale” and threatening severe consequences for any country that provides Iran with an economic “lifeline.” The Trump administration’s Operation Economic Fury aims to cut off what it describes as Iran’s global terror financing and revenue streams.
World Bank data show Iran’s GDP contracted 2.7% in the year to March and inflation reached 62.2% in February, with food prices soaring to a historic high. An Iranian official cited the war as causing the loss of one million jobs.
Sepahvand cautioned that the economic squeeze may strengthen hard-line elements within Iran, complicating prospects for a diplomatic agreement with the United States, and that the burden falls largely on low-income Iranians and young people facing rising prices and job losses.