More US sanctions on Iran.
Energy, the Iranian banking sector, metals and mining, all the key sectors of the Iranian economy.
Prices have quadrupled over the past few months.
They're wondering how much worse it could be.
It's World Business Report from the BBC World Service.
This is Andrew Peach on the way as President Trump says he'll declare the Strait of Hormuz U.S. territory.
We'll look at the sanctions already in place and what other options Washington has.
Also today, the Indonesian president vows state intervention in his country's troubled economy.
And we'll look at the issue of youth unemployment around the world.
In the last hour, President Trump has urged Americans to accept higher petrol prices as the cost of preventing Tehran from obtaining a nuclear weapon.
He also said he would soon declare the Strait of Hormuz...
US territory.
Earlier, the US Treasury Secretary Scott Besson threatened to subject Iran to more economic isolation.
He didn't give further details, but said the new measures could be announced next week.
In a moment, we'll look at what further sanctions the US could have in mind.
But first, to find out more about the economic impact the conflict is already having on the Iranian people, I went to visit BBC Persian.
So I've come to the fifth floor of Broadcasting House in London, where our BBC Persian colleagues are based.
I've come to see Taranay Fathalian.
Just give us a sense, first of all, of what your role is here, Taranay.
What do you do when you're not talking to me?
Well, Andrew, I'm working with the BBC Persian Digital team.
What we're doing is getting user-generated content, or UGC as we say it, from our audiences all around the world, our Persian-speaking audiences all around the world, and we monitor social media.
So as the US and the Treasury Secretary Scott Besant starts talking about more economic consequences for Iran to be announced next week, I wanted to ask what the consequences of the conflict are already for people in Iran.
What are they experiencing in terms of everyday life as a result of it?
The economy of Iran is already crippling.
People are under immense pressure.
I'm hearing on social media that the basic goods, the essentials, are becoming
Unaffordable.
People are cutting corners, cutting edges everywhere.
I was speaking to some women and they said that they've just like stopped buying sanitary products, period products, because they just have to choose between food and medicine.
Hygiene, basically.
And they were looking into other options, cheaper options.
Petrol prices are about to have a spike.
There are reports about a price rise in petrol already.
And that is in an economy that, as I said, was already hitting rock bottom.
So huge consequences already for people.
And do you get the sense that people are worried about what the Americans are saying and people monitoring that and thinking, oh, it's going to get even worse?
Or does it does it just feel like, you know, high level talk to people in Iran, do you think?
The thing is, the public, because they're already experiencing so much, because they're already hitting the rock bottom,
It's difficult to imagine how worse it could be at the moment because people are thinking that already the prices have quadrupled over the past few months.
How worse?
They already can't afford anything.
So they're wondering how much worse it could be.
Are there things you can't get at all?
I mean, you've talked about high prices, but are there things that just aren't available?
I'm seeing here and there that some medications, medicines are unavailable, and if they are, the prices have gone up.
I've spoken to some cancer patients, and they said that their cancer treatment, their medication,
Either have become unavailable or their price has doubled since February before the war.
And there are some products that here and there I hear that
They're becoming rarer.
They say that food and other essentials, they are available.
There hasn't been any shortage just yet, but the prices are high.
My thanks to Taranay Fathalian from BBC Persian for having me in the department earlier.
Now, Claire O'Neill McCleskey is the co-founder of Clarity Compliance Consulting.
She formerly headed the US's Office of Foreign Assets Control.
I asked her what US sanctions are in place against Iran right now.
Functionally, Iran is completely cut off from the US economy.
There's very limited economic activity that is allowed between the two countries, mostly humanitarian activity, some medical activity or agricultural, and then, of course, things related to people immigrating from Iran, settling their estates there.
Really anything outside of that is not allowed right now.
And really starting under the first Obama administration is when you started to see really aggressive U.S. sanctions on Iranian energy, the Iranian banking sector, metals and mining, all the key sectors of the Iranian economy.
And is it possible to pin down exactly what effect it has?
Because I guess if these sanctions have been in place for years and years, then the effect is less noticeable.
Right now, what we're seeing is that the current state of Iran's economy is clearly sort of oriented around surviving despite the sanctions, right?
In terms of their imports, their exports, how they do their banking, how they repatriate their money, that is all aimed at getting around the restrictions that cut them off from the main artery of the international financial system, which would be correspondent banking and dollar clearing.
When Scott Besant, the US Treasury Secretary, talks about more sanctions to be announced in a few days, is it clear to you what that might mean?
It's hard to say because when you're talking purely on the sanctions front, there are limited options left in terms of escalation.
There's a couple of things they could do.
One is they could more aggressively go after third countries that continue to have dealings with Iran.
You know, if you look at Iran's biggest trading partners, it's
Of course, China and then Iran shares borders with many countries, right?
And they still trade with those countries, Turkey, Afghanistan.
They could really aggressively threaten sanctions or even immediately impose sanctions on any third country financial institutions that
Are still involved in financing that trade or clearing transactions related to that trade.
One of the things about the Iran sanctions program is it's so complicated and there's so many authorities layered on top of one another.
They could introduce something new, right?
They could do a new executive order.
And even though that executive order wouldn't necessarily really expand the sanctions, right?
They could do something from a messaging perspective to just signal that they plan to more aggressively go after third countries.
That's so interesting, because I was going to say, how much impact does it have bearing in mind Iran is still trading with other countries, particularly big ones like China?
But maybe if the threat is against the other countries, that might be how they're thinking in Washington, at least about trying to ramp things up.
That's the play that people have used before, right?
So the first Trump administration, that's how they went after Iran.
They had the significant mechanism where they basically went to other countries and said, we need you to reduce your intake of Iranian oil.
Oil or we are going to sanction you.
But as long as you start reducing now, you're okay.
You know, this is what the Biden administration did in Russia with a 2023, I believe, amended executive order that
Basically said, hey, other countries, if you're doing anything related to Russia's military industrial base with a very broad definition of that, we will now sanction you
Just trying to scare people off.
When you talk about cutting off Iran's oil to the rest of the world, it's the physical blockade that is more effective at that, right, of just not letting the oil get out than the threat of sanctions, I think, at this point.
That's Claire O'Neill McCleskey with me.
Live to Chris Lowe now, Chief Economist for FHM Financial in New York.
Chris, good to have you with us.
Can you see what Scott Besant means when he says he's going to impose swinging new sanctions next week?
Thanks, Andrew.
Yeah, look, I think Claire pretty much nailed it, right?
That it's the third parties that are still trading with Iran where sanctions might be tightened.
I think in particular, there's still quite a bit of trade with China.
There's still quite a bit of trade with Russia, too.
But Ukraine has been attacking that trade militarily because it's a lot of weapons traffic back and forth.
Again, I think you can message, you can tell those countries that you're going to crack down as far as China is concerned.
They do not officially recognize U.S. sanctioned power.
They might object.
And there, the physical embargo is probably the answer.
And going back to what I said at the very start, when President Trump says to US citizens, you've got to live with high gas prices, it's the price of Tehran not getting a nuclear weapon, what reaction will he get?
Well, look, Americans are very sensitive to fuel prices.
There's no question.
Particularly in rural America, it can be as much as 15, 20 percent of a household budget.
So it's a very significant factor.
But
You know, looking at where fuel prices are right now, they're right sort of in the midpoint.
They're not as high as they were earlier in the war.
They're obviously not back to prewar levels.
As long as they stay close to that midpoint, I think we're OK.
But I do think if they climb significantly higher, people are going to have a problem with that.
Chris, stay with me.
Now to Indonesia, where the President Prabowo Subianto has hit out at official corruption and says there'll be more state intervention in the country's flailing economy.
As part of his annual Independence Day speech at a time when investors are losing confidence, he said there were too many state-owned enterprises claiming to make a profit while actually making a
Growth and investment are not the ultimate goals our goal is the welfare of the people high economic growth that cannot be enjoyed by the people is of little benefit to us
Live to you, Professor Stephen Marks, Associate Dean and Eldon Smith Professor of Economics at Panoa College in California, an expert in the Indonesian economy.
Stephen, good job we found you.
Thank you very much indeed for being with us.
Just set out for people who are not following this in detail, what's going on with the Indonesian economy, which sounds like it's in a mess.
It's actually doing quite well, Andrew.
Since 2022, real economic growth has been about 5% annually and will accelerate a bit in 2026.
That's actually better than China over the same period on average.
Inflation has eased somewhat relative to the first of the year, looks to be about 3% per year.
The current account deficit is manageable.
The rupiah has, on the other hand, lost more than 6% of its value against the US dollar this year.
Why are international investors not so keen?
Well, I think there is considerable uncertainty over the state of the economy.
And to some extent, there may be concerns over, indeed, the increased levels of corruption that have been observed and the promised increased state intervention.
So President Subianto is on to something with the corruption.
When he says more state intervention is the answer to these state-owned enterprises, to use his words, which say they make a profit when they're actually losing money, is more state intervention the answer to that?
Well, I guess it depends what he means by more state intervention.
In historical terms, in many cases, the Indonesian government has asked
Policies to do more than could actually be managed in a market economy.
And so that has led, for example, to wedges between the prices that different groups pay and the
Thus opportunities for trade between those groups that we would call corruption.
On the other hand, maybe some of that state intervention will be in the form of efforts to heighten transparency at state-owned enterprises and audit them more rigorously.
Is he in trouble or is this just part of a programme of measures the president is introducing and is actually bearing some fruit?
As far as I know, he's not in any serious trouble.
One of the issues is that the nutritious meals program that was a central campaign promise of his in 2024, noble in its objectives to provide food
Free meals to school children, pregnant women, breastfeeding women, and preschoolers, nevertheless has been plagued by
Some systemic corruption and mismanagement.
So that's been a disappointment and he clearly has felt the need to respond vigorously to those concerns.
Professor Stephen Marks, thank you very much.
This is World Business Report from the BBC World Service.
I'm Andrew Peach.
Let's return to Chris Lowe, Chief Economist at FHN Financial in New York.
Got some new retail sales figures out in the US, Chris, and retail sales are down.
Well, they were down.
This is a July number.
They were down six tenths of a percent.
It was a bit of a shock.
But I think it's also really important to understand that Amazon, the huge online retailer, dominates U.S. retail markets.
Moved their Prime Day annual sale this year.
Last year it was in july this year it was in june
So when you look at the retail sales data we saw a retail sales increase of more than 1.1 percent in june and then the sixth tenths drop in july and that's simply moving prime day
You look at the uh average we're growing
At a rate of about 0.3 a month.
And that's actually decent.
That's pretty typical sales growth.
Talking of Amazon, Jeff Bezos is one of the founders, has bought a big chunk of Liverpool Football Club in the English Premier League.
Well, you know, he can certainly afford it, right?
Being the biggest retailer in the world.
But I think it's kind of exciting from a US football fan perspective.
You know, maybe what we'll see down the road is Amazon's Prime Network broadcasting some of those games.
I know that would be exciting.
There are an increasing number of American football fans, especially after the World Cup was hosted here this year.
Absolutely.
And we should just end the week with a quick look at oil prices.
I mentioned this speech that Donald Trump's given in the past hour or so saying he's going to declare the Strait of Hormuz US territory.
Where are oil prices with what's happening there?
Well, in the mid-'80s, they have been for the last couple of weeks.
To put it into perspective, before the war, oil prices were about $65 a barrel.
At the peak during the war, it got up as high as just over $100 a barrel.
So again, we're sort of in the middle of the range in terms of energy prices.
But it is absolutely essential that oil passes through the strait if we're going to see prices stay where they are, let alone decline.
All right, Chris, thank you.
Now the spectre of youth unemployment next.
After sinking to a two-decade low in 2023, now a report from the International Labour Organisation finds joblessness among young people across the globe.
Is back up to 12%.
That's 257 million young people not in a job, education or training.
We'll talk live to Shukti Dasgupta, who's the Director of Employment, Labour Market and Youth Branch of the ILO, which published this report.
Shukti, thank you for being with us.
Just put a bit more flesh on the bones of those numbers.
What are you finding?
So thank you.
And indeed, as you said, this latest edition of the Global Employment Trends for Youth shows that unemployment for youth is ticking upwards globally.
And it is not surprising in the current context of weak economic growth.
The inflation, the trade wars, the geopolitical tensions, this is the primary reason.
But there is also another factor that we find is coming increasingly into the story, and that is that of technological change, AI and automation.
And is it the case that young people are the sort of softest end of the employment market?
So when the cost of living goes up, when there are financial pressures, when AI comes in, it's young people who bear the brunt?
Absolutely.
So normally when there is a weak labor market, it's you to feel the brunt of it.
And that is exactly what we are seeing.
But of course, it changes from, you know, there are nuances in how the story plays out in different parts of the world.
Stay with me.
Let's talk about sub-Saharan Africa now.
Too few jobs for the population there.
But also the report says people are setting up their own businesses.
Among them is Deirdre Iracune from southern Rwanda who set up Youth Proud.
They make wooden kitchen implements.
And employ other young people in doing so.
They sell from a market store, but also internationally online.
He sent us this voice note.
Hello, everyone.
My name is Diedone Radokunda.
I'm a CEO and the owner of the company called Youth Proud Limited.
Many young people...
They think that to create a business is to have a big amount of money.
No, no, no, they don't think that.
They can think that whatever you have, how kind of money you have, you can start a business, maybe small.
I focus on wooden materials, especially used in the kitchen, I mean wooden spoons.
Wooden plates, wooden casseroles, wooden forks.
We started with two workers.
Now we have about 30 workers.
I hope that if you work your job with your heart, with your vision, with your
Thinking you are good thinking i mean you will reach everywhere you want where you come and feel at home
Thank you thanks to you dear don for being part of it
Uh shukti dasgupta from the ilo
It's important to point out there are there are some moments of optimism in the report as well this sort of sense of entrepreneurial spirit being one of them
Yes, indeed.
And in fact, the report finds that, you know, sub-Saharan Africa has always been a region where unemployment rates in general, whether of youth or of adults, have been on the low side.
But that's also because it's a region where people generally cannot afford to be unemployed.
So there is a big part of the labor force that's informally employed.
In small businesses.
I think that was a very positive story and I'm sure that his business will grow and become perhaps more formal.
But in general, the problem there is nine out of 10 young people are informally employed in the sub-Saharan region.
And there's another.
Let me just pause you for a second because I want to go live to New York and bring in Carly.
Carly Taylor is a graduate and job seeker.
Carly, thank you for being with us on World Business Report.
What kind of employment are you after?
Yeah, thank you for that.
I am in events and partnerships.
I've been in hospitality throughout my career.
But as you guys are mentioning, the job market is really hard and I'm having a hard time finding a new role.
What sort of obstacles are you facing?
Why do you think it's tough?
Yeah, so I just recently went back to school to study something new to kind of pivot and add to my experience.
And now that I've done, I've been searching for a new job and opportunity over the last six months.
With that said, I've applied to hundreds only to really hear back from a handful.
It's just really disheartening in the current market between
California and New York.
I've probably applied to 200 jobs, heard back from about five or six.
Because they're being assessed by AI, no doubt.
Absolutely.
A lot of people don't even get an answer.
Thank you, Carly.
Good luck with your job hunt.
Thank you.
Going to go to India now.
Youth unemployment and the desperation for higher paying jobs among the topics discussed on today's Business Daily Taking Stock.
Jyoti Malhotra is Editor-in-Chief of The Tribune and has been talking to my colleague Rahul Tandon about the challenges facing young people in India.
The fear that this demographic dividend could turn into a demographic disaster, that sort of weighs on the minds of people, not just people like me.
I have two young daughters, both of whom are now entering the jobs market.
Do you worry about that?
Are you worried about their future?
I mean, let's give people some figures.
When the Indian Railways advertised last year, 18.7 million people applied for just over...
43,000 jobs.
I mean, I don't think people understand how tough it is to get a job in India.
So you must have sleepless nights when it comes to your two, even though I'm sure they're well-educated and have lots of skills.
See, that's the point.
I think we put so much money into educating our children because we know that it's the only real thing that they will inherit from us.
But yes, at the end of the day, if you spend half your income into your children's education in a private university, and then you don't get a job, so then what do you do?
Back to Shukti Dasgupta from the International Labour Organisation.
Shukti, what do you want to see done?
What do you want governments to do to try and help with this?
Yes, well, I think the point that was raised in regards to India was really important because the graduate unemployment is growing in a number of countries in Southern Asia, in East Asia, India, China, etc.
And the question there is, you know, now just having a good education, digital skills is not enough.
You have to also look at the demand side of the labor market, which is just not creating jobs, especially for entry level, you know, entrance to the labor market.
And part of that story is, of course, weak economic growth, which is seeing a pause in hiring by major companies.
But also the coincidental story, I would say, of AI and automation, especially as regards entry-level jobs in clerical jobs, administration jobs in the services sector, but also in manufacturing, in construction, in food processing, which are normally the sectors where young people
Enter because they have a foothold and then they grow and then they prosper.
But those opportunities are much fewer now.
Shakti, thank you.
Chris Lowe, a quick word from you in New York, because the US is one of the places where this is a problem, growing youth unemployment.
Why do you think it is?
Yeah, look, I think it's a combo of multiple things.
AI obviously is one.
The other, we've had a huge...
Number of immigrants coming into the US in recent years.
And what I would say, the answer to both of those challenges is the same.
You need more economic growth in order to create a more vibrant economy and create more job opportunities.
And we are failing at that right now.
We are failing at it, so is Western Europe, so is the UK.
We can deal with stronger growth.
Chris, thank you very much indeed.
Thanks to all my guests on that.
You'll find much more by going online, bbc.com slash news.
And don't forget to subscribe to World Business Report so you get an update each day.
From me, Andrew Peach, thank you for listening.
The programme's back on Monday.
