Iran's Economic Woes Go beyond Sanctions, Say Analysts

Iran's government faces acute economic challenges as it announces its annual budget. (AFP)
Iran's government faces acute economic challenges as it announces its annual budget. (AFP)
TT

Iran's Economic Woes Go beyond Sanctions, Say Analysts

Iran's government faces acute economic challenges as it announces its annual budget. (AFP)
Iran's government faces acute economic challenges as it announces its annual budget. (AFP)

Iran's government faces acute economic challenges as it announces its annual budget, expected on Tuesday, and not all of its problems are the result of US sanctions, said an AFP report Tuesday.

The rial has lost around half its value against the dollar since US President Donald Trump announced he was withdrawing from the 2015 nuclear deal in May and re-imposing sanctions.

That has driven up prices and blocked much of the foreign investment President Hassan Rouhani had hoped to attract, with the International Monetary Fund now predicting the economy will shrink by 3.6 percent next year.

But analysts say many of the country's woes pre-date Trump and the sanctions.

Iran-based economist Mohammad Mahidashti says the banking system is the "biggest problem -- riddled with fictitious assets and non-performing loans".

Banks issued huge loans under Rouhani's predecessor Mahmoud Ahmadinejad with little apparent care for whether they would be repaid, explained AFP.

Parliament's economic commission said in March that half of all these loans -- worth around $27 billion at the time -- turned sour.

Desperately short of funds, banks have tried to attract fresh deposits with interest rates of 30 percent or more.

While providing a much-needed source of liquidity initially, the interest on these deposits has only added to banks' instability.

Rouhani said recently that "unhealthy" banks were being kept afloat by continuously borrowing from the central bank, and the debts of private lenders have doubled in the year to September.

Banks are also saddled with unsellable properties after pumping cash into a construction boom that ran out of steam around 2013.

"We have close to two million empty houses in Iran. There is simply no demand out there," said Narges Darvish, an economics lecturer at Tehran's Alzahra University, according to AFP.

But the government is loath to let banks fail, fearing a public backlash -- especially after the collapse of dodgy credit agencies helped fuel widespread protests a year ago.

The US withdrawal from the nuclear deal fueled a run on the Iranian rial, but was not the only factor behind the currency's weakness.

In September, central bank governor Abdolnasser Hemmati instead blamed "horrific growth in money supply".

Its data shows that the amount of cash flowing around the Iranian economy has increased 24 percent annually for the past four years.

Given that Iran's economy offers few profitable and secure investment opportunities, citizens had already long sought to change rial savings into dollars.

And when rising expectations that the US would re-impose sanctions pressured the rial in earnest in early 2018, the government's reaction was a mess, according to economist Mousa Ghaninezhad.

"They claim they believe in the free market but they have no coherent strategy," he told AFP.

At one point, in April, the government forcibly shut down exchange houses and tried to fix the rate at 42,000 rials per dollar -- which only fueled panic and drove speculators into the black market.

Recognizing its mistake, the government reopened exchange shops and sacked the central bank governor a few months later.

A fierce crackdown was also unleashed on those exploiting the situation, with dozens of traders put on trial and at least three businessmen executed since October.

But the damage has been done. Imports are now vastly more expensive at the same time as sanctions make it harder to move goods into the country.

Prices have been rising as a result -- the cost of food and drink rose 60 percent in the year to November, according to the central bank.

Despite a privatization drive, much of the economy remains in the hands of the state, either directly, or because groups connected to the government or military are the major shareholders.

This has stifled the private sector, which struggles to attract investment and compete for projects, analysts say.

Economist Ehsan Soltani says state-controlled industries like steel and petrochemicals benefit from huge subsidies -- totaling around $40 billion (35 billion euros) a year in fuel and electricity discounts -- but create relatively few jobs and returns.

"These industries are only wanted because of rent and corruption," he told AFP.

Hopes that the nuclear deal would bring a flood of foreign investment to boost the private sector have been dashed by the return of sanctions.

Meanwhile, efforts to bring greater transparency -- notably, new laws against money-laundering -- have been opposed by powerful vested interests, according to Foreign Minister Mohammad Javad Zarif.

"Those places that launder thousands of billions (of rials) are certainly financially capable of spending a few hundred billion on propaganda (against the laws)," Zarif told Khabar Online news agency last month.



Saudi Real Estate Market Maintains Investment Momentum Despite War Fallout

Residential developments in Saudi Arabia (Ministry of Municipalities and Housing)
Residential developments in Saudi Arabia (Ministry of Municipalities and Housing)
TT

Saudi Real Estate Market Maintains Investment Momentum Despite War Fallout

Residential developments in Saudi Arabia (Ministry of Municipalities and Housing)
Residential developments in Saudi Arabia (Ministry of Municipalities and Housing)

Saudi Arabia's real estate market continues to attract investment despite geopolitical challenges weighing on economic activity worldwide, supported by new housing developments and efforts to expand residential supply.

The Ministry of Municipalities and Housing announced that more than 15,000 residential land plots had been made available through the Sakani platform across the Kingdom between the beginning of 2026 and the end of October, alongside additional projects launched by private-sector developers.

The developments underscore the sector's continued momentum and its importance to the Saudi economy.

Government initiatives and private-sector projects aim to expand housing supply and meet growing demand, reinforcing real estate's position as a key driver of economic growth and diversification.

Strong domestic demand and ongoing urban development projects continue to underpin the market's appeal, attracting investment from both Saudi and international investors.

Against a backdrop of geopolitical uncertainty and war-related disruptions to trade, supply chains, financing costs and construction expenses, the real estate sector has gained importance as an industry driven largely by domestic demand and capable of sustaining economic activity.

Private-Sector Investment

Despite mounting global economic volatility and geopolitical tensions, Saudi Arabia's real estate market continues to attract international investment, supported by clear economic policies, expanding development opportunities and strong housing demand.

Real estate developer Arada recently announced its entry into the Saudi market through a partnership with local company XTOPIA, backed by a SAR 50 billion ($13.3 billion) portfolio of land and development opportunities.

The partnership's first project is a SAR 14 billion residential development in Riyadh's Al Rimal district.

Riyadh Region Municipality, the Ministry of Municipalities and Housing, and the National Center for Privatization & PPP also recently announced the launch of the expression of interest, prequalification and proposal submission stages for a joint land investment project.

The initiative involves developing a municipal land plot in northern Riyadh through a 50-year partnership with the private sector, marking the municipality's first project under the joint investment model.

Real estate specialists described the initiative as an important step toward enabling private investors to develop property assets into sustainable projects with significant economic value.

They said the extended investment period would encourage developers to improve construction quality and services, strengthen project feasibility, diversify real estate offerings and increase supply in one of the capital's most expensive neighborhoods.

Balancing the Real Estate Market

The importance of releasing more residential land lies in achieving greater balance in the property market, a government objective outlined by Crown Prince and Prime Minister Mohammed bin Salman.

The strategy seeks to increase housing supply by making more land available, broadening the options accessible to Saudi citizens and enabling more households to move from searching for a home to building and owning one.

Increasing the availability of residential land, particularly in cities and governorates experiencing rising demand, could ease pressure on land prices over the medium term, provided that plot locations and sizes correspond to actual market needs.

The release of additional land also creates opportunities for real estate developers, contractors, engineering firms and building materials suppliers to benefit from anticipated demand for construction projects.

As a result, businesses across the real estate and construction supply chain could see stronger activity despite the impact of the geopolitical crisis on other economic sectors in the region.

The initiative also expands housing choices, supports efforts to increase homeownership rates and improve quality of life, and encourages urban development beyond major metropolitan centers.

Lowering Prices

Real estate developer Ahmed Omar Basoudan believes the main challenge facing Saudi Arabia's property market in the coming period will not simply be increasing the number of land plots and housing units available.

Rather, he said, the priority must be ensuring that homes reach buyers at prices they can afford, while providing adequate infrastructure and services and keeping development and construction costs under control.

Speaking to Asharq Al-Awsat, Basoudan explained that genuine balance in the real estate market depends on the availability of housing that meets buyers' needs in terms of price, location and quality, rather than simply increasing overall supply.

He said the release of more than 15,000 residential land plots during the first 10 months of the year, together with recently announced private-sector projects, reflected the government's continued commitment to expanding housing supply and providing more residential options.

Basoudan stressed that the latest real estate developments represent an important step toward addressing one of the market's most pressing challenges: achieving a sustainable balance between supply and demand, particularly amid the Kingdom's population growth and continued urban expansion.


Saudi Stocks Rebound 0.9%, Recouping Previous Session's Losses

An investor monitors stock market data on a screen at the Saudi Exchange (Tadawul) in Riyadh (Reuters)
An investor monitors stock market data on a screen at the Saudi Exchange (Tadawul) in Riyadh (Reuters)
TT

Saudi Stocks Rebound 0.9%, Recouping Previous Session's Losses

An investor monitors stock market data on a screen at the Saudi Exchange (Tadawul) in Riyadh (Reuters)
An investor monitors stock market data on a screen at the Saudi Exchange (Tadawul) in Riyadh (Reuters)

Saudi stocks closed higher on Monday, recovering some of the losses sustained in the previous session as heavyweight shares strengthened and the banking sector advanced.

The benchmark Tadawul All Share Index (TASI) rose 0.90% to close at 10,106 points, gaining 90 points. Total trading value reached approximately SAR 3.5 billion ($933 million).

The index had fallen 0.8% on Sunday amid selling pressure on heavyweight stocks.

Anaam International Holding Group, Fitaihi Holding Group and Raoom were among the session's top gainers, rising between 7% and 9% to close at SAR 11.93, SAR 2.11 and SAR 72.30, respectively.

On the losing side, Almunajem Foods led the declines, shedding 9.20% to SAR 49.94, followed by Saudi Paper Manufacturing Co., which fell 6.18% to SAR 48.88, and Alamar Foods, which dropped 4.63% to SAR 44.06.

At the sector level, banks led the gains, advancing 1.60%, supported by a 2.06% rise in Bank AlJazira shares, which closed at SAR 10.89.


Tesla to Refund Many Cybertruck Deposits as Demand Exceeds Production, Musk Says

Tesla Cybertruck electric vehicles sit parked in a storage lot in San Diego, California on April 11, 2025. (AFP)
Tesla Cybertruck electric vehicles sit parked in a storage lot in San Diego, California on April 11, 2025. (AFP)
TT

Tesla to Refund Many Cybertruck Deposits as Demand Exceeds Production, Musk Says

Tesla Cybertruck electric vehicles sit parked in a storage lot in San Diego, California on April 11, 2025. (AFP)
Tesla Cybertruck electric vehicles sit parked in a storage lot in San Diego, California on April 11, 2025. (AFP)

Tesla will have to refund Cybertruck deposits for many customers as orders far exceed production capacity, CEO Elon Musk said, following last week's announcement that the electric vehicle maker is winding down the pickup truck's production at its Texas factory.

"We will try ‌to make ‌as many as ‌possible ⁠before shutting down the ⁠line in about 8 months, but will have to return deposits for a lot of people," the billionaire said in a post on X on Monday.

The comments ⁠come after Musk said ‌Tesla would ‌add an extra production shift to fulfill outstanding ‌Cybertruck orders before dismantling the production ‌line next year to expand output of its Cybercab robotaxi.

The production winddown is slated for mid-2027, Musk announced on ‌Friday, with the resources being redirected to the Cybercab, a vehicle ⁠central ⁠to the automaker's autonomous-driving ambitions.

Tesla began delivering the Cybertruck in late 2023, but demand has fallen far short of Musk's expectations. US sales fell 48% to 20,237 units last year, according to Kelley Blue Book, well below Musk's earlier projection that annual Cybertruck sales could reach 250,000 vehicles.