U.S. and Iranian officials have said that they're not seeking an all-out war — a scenario many experts say Iran can ill afford.
Iran is estimated to have the world's fourth-largest crude oil reserves, according to the World Bank. Much of the country's economic growth and government revenues depend on the sale of crude oil.
But restrictions on the sale of Iranian oil were among the U.S. sanctions that Trump reinstated two years ago. That's one of the major reasons why forecasters, including theThe fall in Iranian oil exports and international restrictions placed on other sectors — such as banking, mining and maritime — have caused the country's total trade with the world to shrink.Rising costs of livingU.S. dollar140,000 rials per dollar this month amid heightened tensions with the U.S.
The weak local currency contributed to high levels of inflation in Iran — which the World Bank said peaked at 52% in May 2019. That raises the costs of living in Iran at a time when job opportunities are lacking.One main implication of a stagnant or declining economy is rising unemployment rate, which has been seen in Iran.
The lack of employment opportunities could worsen poverty in Iran, the World Bank said. It noted that the country's poverty, measured by the proportion of people whose purchasing power is below $5.50 per day, had risen from 8.1% in 2013 to 11.6% in 2016.The Iranian government has limited finances to roll out measures in order to lift the country's economy. That has been exacerbated by overall subdued economy activity and restrictions on oil sale overseas, due to the sanctions in place.
Such fiscal constraints would limit Iran's ability to fund a war, although some experts said Tehran could still ramp up its aggression against the U.S. by using its proxy forces across the Middle East, stretching from Syria and Yemen to Afghanistan.
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