Did Bad Economic Conditions Cause Iran’s protests?

Like other Iranian presidents before him, President Hassan Rouhani is having a bad second term. Only six months after his decisive re-election, protesters were in streets shouting “Death to Rouhani.” Then came a sharp fall in the value of the rial, by 10% in two weeks, which threatens to undo the principal economic achievement of his first term—lowering inflation—and his plans to lower interest rates. Iran’s Central Bank had to increase interest rates last month to stop the fall of the rial. These are precarious times for Rouhani, who has won two elections promising economic revival.

Whatever or whoever started the protests, widespread economic dissatisfaction definitely animated them. Ironically, the economy is doing much better today than it has been in five years. Rouhani must be wondering why protests are happening now, after two years of economic growth, when several years of sanctions and recession went by quietly.

Since the Iran nuclear deal (the Joint Comprehensive Plan of Action) went into effect in January 2016, the economy has experienced rapid growth. GDP grew by 11% in 2016—from March 21, 2016 to March 20, 2017, according to the Iranian fiscal year—and is expected to grow by a robust 6 percent this year. Household survey data confirm that growth has found its way into people’s pockets, though very unevenly. According to survey data from the Statistical Center of Iran, average real per capita income grew by 6.2% in 2016, but spread unevenly across the country: 9.6% in Tehran, 5.9% in other urban areas, and only 3.4% in rural areas.