After nationwide unrest in November, escalation with the U.S. following the killing of Qods Force Commander Qassem Soleimani and the Ukrainian airliner shot down by Iran's Revolutionary Guards, all in a matter of three months, Iran's economy has received yet another blow, this time from a coronavirus outbreak.
The outbreak, officially announced on February 20 is likely to hurt many Iranian businesses who were hoping for better sales ahead of the Iranian New Year (Nowrouz, March 21), the services and food sector.
The food and recreation businesses including hotels, restaurants, hookah (sheesha) places, tea houses, and coffee shops, cultural establishments such as cinemas and theaters, travel agencies, cab companies and retailers have been among the first to feel the heat from the outbreak.
More importantly, however, if the outbreak is not contained soon, it may hugely impact trade and foreign tourism. Both inject some much-needed foreign currency into the ailing economy which U.S. sanctions have crippled since 2018 when Washington pulled off the 2015 nuclear deal.
Trade with Iraq, Turkey and Afghanistan, three of Iran's biggest export markets, is likely to be affected very quickly due to the closure of land borders.
On February 23, four days after the first cases of coronavirus infection and two deaths were reported, Turkey, Iraq and Afghanistan announced the closure of their borders with Iran and cancellation of all flights.
Iraq is Iran's second biggest export market after China. About 22 percent of all Iranian non-oil exports are headed to neighboring Iraq.
Turkey is Iran's gateway to Europe. Iranian exports to Europe have hugely dropped because of U.S. sanctions but Turkey itself is Iran's third-biggest export market. Iran's exports to Turkey stood at $2.23 billion for the three-month period between March 21 and June 21, 2019.
After the UAE, Afghanistan is Iran's fifth-biggest export market. In 2019 Iranian exports to Afghanistan amounted to nearly $2.6 billion. In 2018 Iran was the biggest exporter to Afghanistan, with more than $1.26 billion dollars. Iran exports fuel, construction material, medical equipment, food, appliances and cleaning products to Afghanistan and imports about $25 million worth of products, mainly foodstuff, from Afghanistan.
The economy of China, one of Iran's biggest non-oil export markets, is already being impacted by the coronavirus crisis in the country. The crisis may reduce China's economic growth by as much as 2 percent which is very likely to be reflected in its imports of non-oil goods from Iran. Oil exports have mostly stopped due to U.S. sanctions, but China still buys 25 percent of Iran's non-oil exports.
Tourism is another area that is likely to be hugely impacted by the outbreak in Iran. Iranian travel agents say many foreign tours have now been cancelled.
In the three-month period between March 21 and June 21, 2019 more than three million tourists visited the country, many of them were pilgrims from neighboring Iraq and other countries such as Kuwait and Lebanon who headed to the holy cities of Qom and Mashhad to visit holy shrines.
The government is under pressure from the public to close down the shrines in Qom, the epicenter of the outbreak, and other cities. Qom may even be quarantined. In any case, with a coronavirus outbreak raging, hardly any foreigner would visit Iran.
According to an official of the Cultural Heritage and Tourism Ministry at least 80 percent of pilgrimage tours to Mashhad, Iran's second-largest city and home to the shrine of the eighth Shiite Imam, have already been cancelled. Even if the outbreak is contained it may take quite a while for pilgrims and tourists to return.
Iran has been making a lot of plans to attract foreign tourists, not just pilgrims. China, the country with the biggest number of tourists in the world, was at the top of the list but the situation in China and Iran has drawn a bleak prospect for these plans, at least in short-term.
According to the latest official announcements 12 people have died in Iran from coronavirus infection since February 19, making it the country with the highest fatalities after China. Unofficial figures speak of more than 50 fatalities.
