Former World Bank chief says Iran economy collapsing into 'barter system' amid conflict

Former World Bank President David Malpass predicted Sunday that Iran’s economy could collapse into a “barter system” as the country’s financial crisis worsens amid the conflict with the U.S. and Israel.

“All around the world, people in poor countries struggle with getting money, and they go back to a barter system where — and I’m sure that’s happening in Iran — where people are desperate to get food, so they sell their furniture, or you know, their services,” Malpass told John Catsimatidis in a radio interview on “The Cats Roundtable” show.

Large-scale protests erupted across Iran early this year over the country’s ailing economy, as the rial currency fell to a record low. The collapse, coupled with high inflation, led to the resignation of the head of the Iranian Central Bank, Mohammad Reza Farzin, at the time.

Iranian state data released Tuesday showed that inflation inside the country has continued to accelerate, with prices on food and essential goods soaring, according to Iran International.

The London-based news channel reported that the price of bread has risen 140 percent from a year ago, while the price of meat and related products has increased 135 percent. Fruits, nuts and dairy products also rose by more than 100 percent.

The crisis has been compounded by U.S. and Israeli strikes, some of which, special correspondent Reza Sayah told PBS News on Tuesday, knocked out power in parts of Tehran.

“It’s very hard to run a banking system without internet and also without, you know, I think it may get to this in a lot of Iran, without electricity,” said Malpass, who resigned from the World Bank in 2023.

“So you can — we can expect shortages across Iran, and that will put pressure on the government. Whether they crack down, we’ll have to see what their response is,” he added.

Reuters reported on March 11 that an administrative building linked to Bank Sepah, one of the country’s largest public banks, had been struck, citing the semiofficial Mehr News Agency.

President Trump threatened on Thursday to conduct strikes on Iranian electrical power plants if the regime did not agree to come to the negotiating table for a peace deal.

The president has imposed a Monday deadline for Iran to reopen the Strait of Hormuz, a critical maritime oil choke point, vowing to rain “all Hell” down if it is not met.

The de facto blockade of the strait has caused oil and gas prices to surge since the start of the conflict on Feb. 28, with the price of international benchmark Brent crude trading at $109 per barrel as of Saturday night.  

Prices for a wide range of fuels and food products have spiked in response, raising fears that a prolonged war could spark higher global inflation.  

Malpass argued on Sunday that the U.S. is better positioned to handle the growing economic fallout than other countries.

“I do have to say, quite a bit of the world is not as fortunate as the United States in terms of energy production and also in terms of innovation, the ability to reinvent ourselves very quickly,” he said.