Iran’s economy could contract by about 5% this year after the United Arab Emirates said it would halt all trade and financial ties with Iran, according to Mehrdad Sepahvand, a former economic adviser to the Central Bank of Iran and now director at Daric Investment Group. Sepahvand disputed U.S. President Donald Trump’s claim that Iran is on the verge of economic collapse, saying shops remain stocked and there has been no major run on banks despite sanctions, banking imbalances and severe cyberattacks. The World Bank estimates Iran’s gross domestic product contracted 2.7% in the year ending March, while inflation reached 62.2% in February and food-price inflation hit 99%. An Iranian official estimated the war had destroyed one million jobs. Sepahvand said the UAE’s decision, which followed what the Gulf state said were two Iranian ballistic missiles fired at it, would pressure Iran’s exchange rate, increase trade costs and fuel inflation over the next two quarters. Trump has threatened economic consequences for countries providing Iran with a lifeline and expanded the pressure campaign known as Operation Economic Fury. Sepahvand said the squeeze is strengthening Iranian hardliners, reducing the prospects for an agreement with the U.S., and placing the greatest burden on low-income Iranians and young people.