New data from the Central Bank of Iran reveals that the total value of bounced checks in the country surged to an unprecedented 1000 trillion rials ($1.7 billion, based on the open market exchange rate) in July 2024.
The report indicates that 10.6% of all issued checks were returned in terms of volume, and 15.7% in terms of value during the past month.
Historical data from the Central Bank shows that the number of bounced checks in July reached its highest level since May 2020, when the country was grappling with the COVID-19 crisis. In total, nearly 912,000 checks worth approximately 1000 trillion rials were returned during the fourth month of Iran’s fiscal year (June 21-July 21).
The report does not detail the distribution of bounced checks between companies and individuals but highlights that over 30% of the returned checks (by volume) were recorded in the capital, Tehran. More than 11% were in Isfahan, 7.4% in Razavi Khorasan, 7.4% in East Azerbaijan, and 5.6% in Yazd. These provinces are key industrial hubs and contribute significantly to the country's GDP.
The Central Bank has also not provided an explanation for the continued surge in the number and value of bounced checks since the beginning of this year.
An increase in bounced checks, whether in the individual or corporate sectors, indicates a worsening economic situation in the country.
Iranian officials have pointed to a 4.5% economic growth in the past year and have repeatedly claimed that the country’s economic situation is improving. However, details of last year’s economic growth reveal that two main factors driving the economy were increased government expenditures and oil revenues. The oil and gas sector saw a growth of around 14.7% based on 2011 constant prices, while government spending grew by 17%. Without these two elements, Iran’s economic growth would be flat or negative.
OPEC and international agency data show that Iran’s oil production growth has nearly stalled in recent months, making it unlikely for the country’s GDP to rise again through increased oil exports.
The International Monetary Fund (IMF) has also forecasted that Iran’s GDP growth at 3.3% in 2024 and 3.1% for 2025, far below the 2023 level.