Economic Damage and Sectors’ Value-Added Losses in Iran under COVID-19 Lockdown Scenarios

Authors

1 The Research Institute for Science, Technology, and Industry Policy Sharif University of Technology, Tehran, Iran

2 Department of Economics, Imam Sadiq University, Tehran, Iran

Abstract

The COVID-19 disease has serious economic consequences in all countries of the world. In this paper, the impact of the pandemic on the gross domestic product (GDP) and the value-added of Iranian economic sectors is simulated based on input-output analysis. The delay caused by the pandemic will not necessarily be compensated in the coming years, so it is important to understand the long-term impact of COVID-19 on the economy. Using Iran’s economy input-output tables produced by Iranian authorities, it is possible to measure the economy’s response to the COVID-19 shock. The nine shock scenarios are considered based on Oxford Government Response Tracker to make the assumptions as close to reality as possible. The median scenario implies that Iran’s output and GDP will decline by 2.6% and 1.7%, respectively, in 2021 and 2022. The scenarios range from the optimistic one with fewer restrictions, resulting in a 2.8% GDP decline, to the pessimistic scenario with major restrictions and barriers leading toward a GDP decrease of 7%. The huge value-added losses were in the “libraries, museums and other cultural activities” sector, and the largest increase was in the “health care” sector.

Keywords

Iranian Economic Review

Articles in Press, Accepted Manuscript
Available Online from 21 September 2022

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