 | This article needs to beupdated. Please help update this article to reflect recent events or newly available information.(April 2023) |
 | |
| Currency | Iranian rial (IRR,﷼)[note 1] |
|---|---|
| March 21–20 | |
Trade organizations | ECO,OPEC,GECF,WTO (observer),SCO,Brics and others |
Country group |
|
| Statistics | |
| Population |  91,997,839 (2025)[4] |
| GDP | |
| GDP rank | |
GDP growth | |
GDP per capita | |
GDP per capita rank | |
GDP by sector |
|
GDP by component |
|
 29.5% (2025)[7] | |
| NA[6] | |
Population belowpoverty line |
|
| 38.8medium (2018)[10] | |
 24 out of 100 points (2023,149th rank) | |
Labor force | |
| Unemployment |
|
| Gross savings | 41.758% of GDP (2022)[16] |
Main industries | petroleum,petrochemicals,fertilizers,caustic soda,car manufacture, parts,pharmaceuticals,home appliances,electronics,telecommunications,energy,power,textiles,construction,cement and otherconstruction materials,food processing (particularly sugar refining and vegetable oil production), ferrous and non-ferrousmetal fabrication,armaments |
| External | |
| Exports | $107.43 billion (2018)[17] |
Export goods | petroleum (56%),[17]chemical and petrochemical products,automobiles,fruits and nuts,carpets |
Main export partners | |
| Imports |  $54.46 billion (2018)[19] |
Import goods | industrial raw materials and intermediate goods (46%), capital goods (35%), foodstuffs and other consumer goods (19%), technical services |
Main import partners | |
FDI stock | |
Grossexternal debt | $9.142 billion (December 2022)[21] |
| Public finances | |
| $85.2 billion (December 31, 2020, est.)[22] | |
| +3% (of GDP) (2022 est.)[22] | |
| Revenues | IRR 8,298,940 billion (2022)[16] |
| Expenses | IRR 12,487,173 billion (2022)[16] |
| |
All values, unless otherwise stated, are inUS dollars. | |
Iran has amixed,centrally planned economy with a largepublic sector.[24][needs update] It consists of hydrocarbon, agricultural and service sectors, in addition to manufacturing and financial services,[25] with over40 industries traded on theTehran Stock Exchange. With 10% of the world'sproven oil reserves and 15% of itsgas reserves, Iran is considered an "energy superpower".[26][27][28][29][30] Nevertheless since 2024, Iran has been suffering from anenergy crisis.
Since the1979 Islamic revolution, Iran's economy has experienced slowereconomic growth, highinflation, and recurring crises. The 8-yearIran–Iraq War (1980–1988), increasedCorruption in Iran, and subsequentinternational sanctions severely disrupted development.[31] In recent years, Iran's economy has faced stagnant growth, inflation rates among the highest in the world,currency devaluation, risingpoverty,water andpower shortages, and low rankings incorruption andbusiness climate indices. The briefwar with Israel in June 2025 further exacerbated economic pressures, causing billions in damage and loss of revenues.[32] Despite possessing largeoil andgas reserves, Iran's economy remains burdened by structural challenges and policy mismanagement, resulting in limited growth and a decline in living standards in the post-revolution era.[33]
A unique feature of Iran's economy is the reliance on large religious foundations calledbonyads, whose combined budgets represent more than 30 percent ofcentral government spending.[citation needed]
In 2007, theIranian subsidy reform plan introduced price controls and subsidies particularly on food andenergy.[34][35]Contraband, administrative controls,widespread corruption,[36][37] and other restrictive factors undermineprivate sector-led growth.[38] The government's 20-year vision involved market-based reforms reflected in a five-year development plan, 2016 to 2021, focusing on "a resilient economy" and "progress in science and technology".[39] Most of Iran's exports areoil and gas, accounting for a majority ofgovernment revenue in 2010.[40] In March 2022, the Iranian parliament under the then new presidentEbrahim Raisi decided to eliminate a major subsidy for importing food, medicines and animal feed, valued at $15 billion in 2021.[41] Also in March 2022, 20 billion tons of basic goods exportsfrom Russia including vegetable oil, wheat, barley and corn were agreed.[41]
Iran'seducated population,high human development, constrained economy and insufficientforeign and domestic investment prompted an increasing number ofIranians to seek overseas employment, resulting in a significant "brain drain".[38][42][43][44] However, in 2015, Iran and theP5+1 reached adeal on the nuclear program which removed mostinternational sanctions. Consequently, for a short period,the tourism industry significantly improved and the inflation of the country was decreased,[citation needed] thoughUS withdrawal from the JCPOA in 2018 hindered the growth of the economy again and increased inflation.[citation needed]
GDP contracted in 2018 and 2019, but a modest rebound was expected in 2020.[45] Challenges include aCOVID-19 outbreak starting in February 2020,US sanctions reimposed in mid-2018, increased unemployment due to the sanctions,[45] inflation,[39][45]food inflation,[46] a "chronically weak and undercapitalized"banking system,[45][47] an "anemic" private sector,[45] andcorruption.[48] Iran's currency, theIranian rial, has fallen,[49] and Iran has a relatively low rating in "Economic Freedom",[50][45] and "ease of doing business".[51]Recently, Iran faces severe economic challenges resulting from long conflict with Israel and the war that brokebetween the two states, which resulted in a destruction of investments of more than 3 trillion USD.[52]
In 546 BC,Croesus ofLydia was defeated and captured by thePersians, who then adoptedgold as the main metal for their coins.[53][54] There are accounts in the biblicalBook of Esther of dispatches being sent from Susa to provinces as far out as India and theKingdom of Kush during the reign ofXerxes the Great (485–465 BC). By the time ofHerodotus (c. 475 BC), theRoyal Road of thePersian Empire ran some 2,857 km from the city ofSusa on the Karun (250 km east of the Tigris) to the port of Smyrna (modernİzmir inTurkey) on theAegean Sea.
Modernagriculture in Iran dates back to the 1850s whenAmir Kabir undertook a number of changes to the traditional agricultural system. Such changes included importing modified seeds and signing collaboration contracts with other countries.Polyakov'sBank Esteqrazi was bought in 1898 by theTsarist government of Russia, and later passed into the hands of the Iranian government by a contract in 1920.[55] The bank continued its activities under the name ofBank Iran until 1933 when incorporating the newly foundedKeshavarzi Bank.[55][56]
TheImperial Bank of Persia was established in 1885, with offices in all major cities of Persia.[55]Reza Shah Pahlavi (r. 1925–41) improved the country's overall infrastructure, implemented educational reform, campaigned against foreign influence, reformed the legal system, and introduced modern industries. During this time, Iran experienced a period of social change, economic development, and relative political stability.[56]
Reza Shah Pahlavi, who abdicated in 1941, was succeeded by his son,Mohammad Reza Shah Pahlavi (r. 1941–79). No fundamental change occurred in theeconomy of Iran during World War II and the years immediately following. Between 1954 and 1960 a rapid increase in oil revenues and sustained foreign aid led to greater investment and fast-paced economic growth, primarily in the government sector. Subsequently, inflation increased, the value of the national currency, the rial, depreciated, and a foreign-trade deficit developed. Economic policies implemented to combat these problems led to declines in the rates of nominal economic growth and per capita income by 1961.[56]
Prior to 1979, Iran developed rapidly. Traditionally agricultural, by the 1970s, the country had undergone significant industrialization and modernization.[57][58] The pace slowed by 1978 ascapital flight reached $30 to $40 billion 1980-US dollars just before therevolution.[59]
Following the nationalizations in 1979 and the outbreak of theIran–Iraq War, over 80% of the economy came under government control.[citation needed] The eight-year war with Iraq claimed at least 300,000 Iranian lives and injured more than 500,000. The cost of the war to Iran's economy was some $500 billion.[60]
After hostilities ceased in 1988, the government tried to develop the country'scommunication,transportation, manufacturing,health care,education and energy sectors, including its prospectivenuclear power facilities, and began integrating its communication and transportation systems with those of neighboring states.[61]
The government's long-term objectives since the revolution were stated aseconomic independence,full employment, and a comfortable standard of living butIran's population more than doubled between 1980 and 2000 and its median age declined.[62] Although many Iranians are farmers, agricultural production has consistently fallen since the 1960s. By the late 1990s, Iran imported much of its food. At that time, economic hardship in the countryside resulted in manypeople moving to cities.[59]
Iran's national science budget in 2005 was about $900 million, roughly equivalent to the 1990 figure.[63] By early 2000, Iran allocated around 0.4% of its GDP toresearch and development, ranking the country behind the world average of 1.4%.[64] In 2009 the ratio of research to GDP was 0.87% against the government's medium-term target of 2.5%.[65] Iran ranked first in scientific growth in the world in 2011 and 17th in science production in 2012.[citation needed]
Iran has a broad and diversifiedindustrial base.[66] According toThe Economist, Iran ranked 39th in a list of industrialized nations, producing $23 billion of industrial products in 2008.[67] Between 2008 and 2009 Iran moved to 28th from 69th place in annual industrial production growth because of its relative isolation from the2008 financial crisis.[68]
In the early 21st century, the service sector was Iran's largest, followed by industry (mining and manufacturing) and agriculture.
Iran's long-term economic growth since the1979 Islamic Revolution has been far below its pre-revolution performance. According toCentral Bank data,GDP grew on average only about 1.9% per year from 1979 to 2020, compared to 9.1% annually in 1960–1979 before the revolution.[69] The Iran–Iraq War (1980–88) caused a deep recession: during 1981–89 Iran's GDP grew only 0.9% annually on average, the lowest of any period, as war destruction and revolutionary upheaval crippled output.[69] In the early 1990s, after the war, Iran saw a rebound –President Akbar Hashemi Rafsanjani's administration (1989–1997) achieved about 5.5% average growth by rebuilding infrastructure and liberalizing parts of the economy.[69]
In 2008, Iran's GDP was estimated at $382.3 billion ($842 billion PPP), or $5,470 per capita ($12,800 PPP).[38]
In 2010, the nominal GDP was projected to double in the next five years.[70] Real GDP growth was expected to average 2.2% a year in 2012–16, insufficient to reduce the unemployment rate.[71] Furthermore,international sanctions have damaged the economy by reducingoil exports by half, before recovering in 2016.[72][73] TheIranian rial lost more than half of its value in 2012, directing Iran toimport substitution industrialization and aresistive economy.[72][74] According to theInternational Monetary Fund, Iran is a "transition economy", i.e., changing from a planned to a market economy.[75]
In 2008, theUnited Nations classified Iran's economy as semi-developed.[76] In 2014, Iran ranked 83rd in theWorld Economic Forum's analysis of theglobal competitiveness of 144 countries.[77][78][79]
In 2008, according toGoldman Sachs, Iran has the potential to become one of the world's largest economies in the 21st century.[80][81] In 2014, Iranian PresidentHassan Rouhani stated that Iran has the potential to become one of theten largest economies within the next 30 years.[82]
The lifting of sanctions in 2016 under theJCPOA nuclear deal spurred a one-time jump of 12.5% GDP growth in 2016, Iran's only double-digit growth in decades (mostly from restored oil exports).[83][84] But after theUnited States reimposed sanctions in 2018, Iran entered another downturn (GDP fell in 2018–2019). The 2011–2020 period is regarded as a "lost decade" for Iran's economy, with average growth near 0.5%, due to sanctions, capital flight, and low investment.[85][86]
After a modest recovery in 2020–2022, theIMF andWorld Bank estimated Iran's real GDP growth at around 2–5% in 2022–2024, partly due to higher oil prices and improved non-oil output.[87][88] However, for 2025 the outlook turned grim: after new U.S. sanctions and the mid-2025 conflict, the IMF projected near zero growth (0.3%) for 2025, revising down earlier forecasts.[89] Oil production and exports have been constrained by sanctions and the 2025 war damage; Iran's oil exports, which averaged ~1.4–1.7 million barrels/day in 2024, were expected to drop by several hundred thousand barrels in 2025 under sanctions.[89][90]
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| Year (Source:IMF)[91] | GDP, current prices (billionsIRR) | ImpliedPPP conversion rate (USD/IRR) | GDP per capita, PPP (currentinternational dollar) | Inflation index (averageCPI) (2011/2012=100) | Current account balance (billions US dollars) | Population (million persons) |
|---|---|---|---|---|---|---|
| 1980 | 6,622 | 40 | 4,267 | 0.5 | -3.6 | 38 |
| 1985 | 16,556 | 53 | 6,469 | 0.9 | -0.9 | 48 |
| 1990 | 35,315 | 101 | 6,410 | 2.5 | -2.7 | 55 |
| 1995 | 185,928 | 399 | 7,265 | 9 | 3.4 | 64 |
| 2000 | 580,473 | 940 | 9,666 | 21 | 12.5 | 64 |
| 2005 | 1,831,739 | 2,025 | 13,036 | 40 | 15.4 | 69 |
| 2010 | 4,333,088 | 3,498 | 16,664 | 82 | 27.3 | 74 |
| 2015 (est.) | 13,077,142 | 9,788 | 16,918 | 253 | 6.9 | 79 |
Expansion ofpublic healthcare andinternational relations are the other main objectives of the fifth plan, an ambitiousseries of measures that includesubsidy reform,banking recapitalization,currency,taxation,customs,construction, employment, nationwide goods and services distribution, social justice and productivity.[92] The intent is to make the country self-sufficient by 2015 and replace the payment of $100 billion in subsidies annually with targetedsocial assistance.[93][94][95][96] These reforms target Iran's major sources of inefficiency andprice distortion and are likely to lead to major restructuring of almost all economic sectors.[94]
Byremoving energy subsidies, Iran intends to make its industries more efficient and competitive.[97] By 2016, one third of Iran's economic growth is expected to originate from productivity improvement. Energy subsidies left the economy as one of the world's least energy-efficient, withenergy intensity three times the global average and 2.5 times higher than the Middle Eastern average.[98] Notwithstanding its own issues,the banking sector is seen as a potential hedge against the removal of subsidies, as the plan is not expected to directly impact banks.[99]
Iran's budget is established by theManagement and Planning Organization of Iran and proposed bythe government to the parliament beforethe year's end. Following approval of the budget byMajlis, thecentral bank presents a detailedmonetary and credit policy to theMoney and Credit Council (MCC) for approval. Thereafter, major elements of these policies are incorporated into the five-year economic development plan.[56] The plan is part of "Vision 2025", a strategy for long-term sustainable growth.[100]
| Item | 2010 (achieved) | 2010–15 (target) |
|---|---|---|
| GDP world ranking | 18thlargest economy by PPP[101] | 12th in 2015[citation needed] |
| Annual growth rate | 2.6% | 8% on average (based on $1.1 trillion domestic andFDI);[102][103]BMIArchived January 31, 2011, at theWayback Machine forecast: 3.6% on average (2009–14)[104] |
| Unemployment | 11.8% according to government; unofficially: 12–22%;[105] 30% according to opposition[106] | 7% by 2015, by creating 1 million new jobs each year[102] |
| Inflation rate | 15% (as of January 2010) | 12% on average[102] |
| Value Added Tax | 3% | 8%[107] |
| Privatization | — | 20% of state-owned firms to be privatized each year[108] |
| Share of cooperative sector (% GDP) | < 5%[109] | 25%[110] |
| R&D (% GDP) | 0.87% | 2.5%[65] |
| Share of non-oil exports | 20% | 30% ($83 billion) by 2016[102][107][111] |
| Oil price &revenuesin budget | $60 per barrel | $65 per barrel on average[102] / $250 billion inoil and gas revenues[112] in 2015 once thecurrent projects come on stream;International Monetary Fund projections: ~$60 billion only[113] |
| National Development Fund | — | 30% ofoil revenues to be allocated to theNational Development Fund by 2015[114] |
| Oil production | 4.1 million bpd | 5.2 million bpd (with some 2,500 oil and gas wells to be drilled and commissioned)[115] |
| Natural gas production | — | 900 million cubic meter/day[citation needed] |
| R&D projects in oil industry | — | Implementation of 380 research projects by 2015 covering the enhancement of the recovery rate, gas conversion and hydro conversion[116] |
| Investment inoil and gas industry | — | $20 billion a year in private andforeign investment, in part to boostoil refining capacity[102][117] |
| Petrochemical output | ~50 million tpy | 100 million tpy[118][119] |
| Bunkering | 25% market share inPersian Gulf | 50% market share or 7.5 million tpy of liquid fuel[120] |
| Oil products storage capacity | 11.5 billion liters | 16.7 billion liters[citation needed] |
| Natural gas storage capacity | — | 14 billion cubic meters[citation needed] |
| Electricity generation capacity | 61,000 MW | 86,000 MW[121] |
| Efficiency of power plants | 38% | 45%[122] |
| Investment inmining and industry | — | $70 billion / 700,000 billionrials[123] |
| Crude steel production | ~10 million tpy | 42 million tpy by 2015[123] |
| Iron ore production | ~27 million tpy | 66 million tpy by 2015[123] |
| Cement | ~71 million tpy | 110 million tpy[123] |
| Limestone | — | 166 million tpy[123] |
| Industrial parks | — | 50 new industrial parks to be built by 2015[124] |
| Ports capacity | 150 million tons | 200 million tons[125] |
| Railways | 10,000 kilometers[126] | 15,000 kilometers by 2015 at a cost of $8 billion per annum[94] |
| Transit | 7 million tons | 40 million tons of goods[127] |
| Electronic trade | — | 20% of domestic trade, 30% of foreign trade and 80% of government transactions to be made electronically[128] |
The sixth five-year development plan for the 2016–2021 period places emphasis on "guidelines" rather than "hard targets".[129] It defines only three priorities:
Since the 1979 revolution,government spending has averaged 59% on social policies, 17% on economic matters, 15% onnational defense, and 13% on general affairs.[56] Payments averaged 39% oneducation,health andsocial security, 20% on other social programs, 3% onagriculture, 16% onwater,power and gas, 5% onmanufacturing and mining, 12% onroads and transportation and 5% on other economic affairs.[56] Iran'sinvestment reached 27.7% of GDP in 2009.[38] Between 2002 and 2006, inflation fluctuated around 14%.[131]
In 2008, around 55% of government revenue came fromoil and natural gas revenue, with 31% fromtaxes and fees.[132][133] There are virtually millions of people who do not paytaxes in Iran and hence operateoutside the formal economy.[38] The budget foryear 2012 was $462 billion, 9% less than 2011.[134] The budget is based on anoil price of $85 per barrel. The value of the US dollar is estimated atIRR 12,260 for the same period.[134]
According to the head of the Department of Statistics of Iran, if therules of budgeting were observed the government could save at least 30 to 35% on its expenses.[135] The central bank'sinterest rate is 21%, and theinflation rate has climbed to 22% in 2012, 10% higher than in 2011.[136] There is little alignment betweenfiscal andmonetary policy. According to theCentral Bank of Iran, thegap between the rich and the poor narrowed because ofmonthly subsidies but the trend could reverse if high inflation persists.[137]
According to official data, as of 2023 Iran spends 10.3 billionUSD or 2.1% of itsGDP on national defense. This percentage is similar to that in other countries such asUK,France andFinland.[138]
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In 2025, the Iranian budget bill granted 51% of the total oil and gas export revenues, estimated at 12 billion euros, to theIslamic Revolutionary Guard Corps (IRGC) and theLaw Enforcement Command (LEF).[139][140]
Iran also financesHezbollah, theYemeni Houthis, Iraqi militia, andHamas. The average annual budget reserved for the funding ofIran's proxies is estimated at US$1.6 billion.[141] According to Syrian opposition sources, starting from the beginning of 2011, Iran allocated a total of US$50 billion to maintain theAssad regime inSyria. However, this investment proved to be a failure following the eventual collapse of the regime.[142][143]
The most costly of Iran's defense expenditures is its nuclear program. The estimated total cost of Iran'snuclear program until 2025 approaches US$500 billion.[144][145] As a result of its nuclear program Iran is subject to internationalsanctions, causing a long-term economic stagnation which cost Iran an additional US$1.2 trillion over 12 years.[146][147] Furthermore, the sanctions led to a significant decline inforeign direct investments (FDI), with Iran experiencing a reduction of approximately 80% in FDI between 2011 and 2021.[148]
Iran consistently ranks poorly on international corruption and governance indices. InTransparency International'sCorruption Perceptions Index (CPI), Iran scores very low – in the 2023 CPI report, Iran scored 23/100, ranking 151st out of 180 countries (among the worst 20% globally for perceived public-sector corruption).[149] This was a slight decline from the previous year (score 24). Issues include widespread bureaucratic corruption, bribery, embezzlement, and the influence of powerful organizations that operate outside formal oversight (like parastatal religious foundations and the Revolutionary Guard's economic wing). Corruption has been cited as a major obstacle to investment and equitable growth in Iran.[150] Iranian leaders, including Supreme LeaderAli Khamenei, have at times called for "jihad against corruption", and some high-profile arrests/trials have occurred (e.g. banking fraud scandals). However, critics argue that many corrupt actors enjoy impunity, especially if politically connected, and that anti-corruption efforts are often politicized or selective.[151][152]
The business climate in Iran is widely seen as difficult. In the World Bank's now-discontinued Ease of Doing Business Index, Iran was ranked around 127th out of 190 countries in the last published report (Doing Business 2020), reflecting a generally poor environment for starting and running private businesses.[153] Cumbersome regulations, lengthy permit processes, weak contract enforcement, and barriers to trade and finance all contributed to this low ranking. Although Iran made some reforms (e.g. simplifying business registration and improving access to credit information), it lagged behind regional peers. International sanctions added another layer of difficulty, as Iranian firms were cut off from global banking and faced restrictions on imports/exports.[153]
Iran is rated as "Repressed" economically in the Heritage Foundation's Index of Economic Freedom. In the 2025 Heritage index, Iran's score was 42.5 (out of 100), ranking it 169th in the world (near the bottom, among countries with least economic freedom).[154] This reflects extensive state intervention, weak property rights, and lack of investment freedom. Large sectors of Iran's economy are dominated by the government or semi-state entities (including the bonyads and IRGC-affiliated companies), leading to oligopolies and limited competition. The judiciary's lack of independence and rule-of-law issues also deter investors.[154]
Governance indicators by the World Bank also rate Iran poorly on control of corruption, regulatory quality, and rule of law.[155][156] These problems have tangible impacts: for example, cumbersome customs procedures and the prevalence of informal payments increase costs for businesses; unclear property rights or contract enforcement discourages entrepreneurship. International companies have largely shied away from investing in Iran (aside from some Chinese, Russian, and regional firms) due not only to sanctions but also concerns about transparency and predictability.[157] Iran's government acknowledges the need to improve its business environment – theRouhani administration (2013–2021) made it a goal to climb rankings – but progress has been limited, especially as U.S. sanctions returned.[157]
Inflation in Iran has been persistently high since the revolution, eroding living standards. During 1960–1978, Iran's inflation was usually in single digits, but after 1979 it surged into double digits almost every year. From 1979 to 2024, consumer prices increased astronomically – an item that cost 100 rials in 1960 costs over 2 million rials by 2025.[158] The average inflation rate since 1979 has been about 17–18% per year, compared to under 10% before 1979.[158][88] Periodic bouts of very high inflation occurred: in the 1980s during the war and money-printing, inflation topped 20–30%. In the 1990s, it spiked above 50% (in 1995). Tightening measures brought inflation down to ~10% by the early 2000s, but it accelerated again later. International sanctions on Iran's oil and banking (especially 2012 and 2018 onward) led to currency devaluation and shortages, driving inflation to 30–50% annually in 2018–2023.[159] By 2023–2024, Iran's annual inflation was roughly 40%, particularly elevated for food prices, which led to steep declines in real incomes.[160] In 2025, amid renewed sanctions and war disruption, the IMF raised Iran's projected inflation to over 43%, placing Iran as the 4th-highest inflation country globally (afterVenezuela,Sudan,Zimbabwe).[89][161] The latest data shows that the annual inflation rate reached 38.7% in May 2025.[162] Due to the high inflation and the devaluation of the Iranian real (90% since 2018)[162] have brought the Iran's parliament to approve a bill in committee that paves the way to remove four zeros from the national currency, the rial, in an effort to tackle long-term inflation. However, experts say that while cutting zeros from the currency may have some benefits, it does not offer a clear solution to Iran’s deeper economic problems.[162]
In August Iran effectively raised taxation by introducing a new law making inflation partly taxable framing it as a tool against hoarding in a country where inflation often exceeds 40 percent.[163]
Iran had an estimated $110 billion inforeign reserves in 2011[164] and balances itsexternal payments by pricing oil at approximately $75 per barrel.[165] As of 2013, only $30 to $50 billion of those reserves are accessible because of current sanctions.[166]Iranian media has questioned the reason behind Iran's government non-repatriation ofits foreign reserves before the imposition of thelatest round of sanctions and its failure to convert intogold. As a consequence, theIranian rial lost more than 40% of its value between December 2011 and April 2012.[137]
Iran's external and fiscal accounts reflect falling oil prices in FY 2012, but remain in surplus. The current account was expected to reach a surplus of 2.1% of GDP in FY 2012, and the net fiscal balance (after payments to Iran'sNational Development Fund) will register a surplus of 0.3% of GDP.[71] In 2013 theexternal debts stood at $7.2 billion down from $17.3 billion in 2012.[167] Overallfiscal deficit is expected to deteriorate to 2.7% of GDP in FY 2016 from 1.7% in 2015.[168]
Money in circulation reached $700 billion in March 2020 (based on the 2017pre-devaluation exchange rate), thus furthering the decline of theIranian rial and rise in inflation.[169][170]
The Iranian rial has continually lost value, especially since the 2010s. The currency was roughly 70 rials per US dollar before 1979; after the revolution and war, it fell to ~1,700 rials/USD by 1990s, and kept sliding.[171] Following the U.S. withdrawal from the nuclear deal (2018) and sanctions, the rial's decline accelerated: the free-market exchange rate crossed 300,000 rials/USD in 2020, then 600,000 by late 2022, and hit 1,000,000 rials per USD in early 2025 – a psychological milestone of 1 million.[171][172] Authorities periodically attempted currency reforms, e.g., banning exchange shops, unifying rates, or proposing to cut four zeros from the currency, but the underlying pressures of limited foreign exchange and excess money supply have kept the rial weak.[173] By 2025, Iran's currency and inflation problems were severe enough that even basic goods saw rapid price rises, sparking protests over living costs.[174][175] Subsidy reforms (such as cutting the subsidized currency for imports in 2022) also led to jumps in prices of staples like bread and medicine.[176][177]
Iran's stock market, theTehran Stock Exchange (TSE), has experiencedboom-and-bust cycles in recent years, often moving opposite to the real economy.[178] During recessions and currency devaluation, many Iranians invested in stocks as a hedge against inflation, fueling speculative rallies.[179] In 2019–2020, amid U.S. "maximum pressure" sanctions and a recession, the TSE index surged by over 500% within a year.[180] The index hit record highs (over 2 million points in Aug 2020), propelled by high liquidity and public campaigns by authorities for people to buy stocks. Analysts warned of abubble, given poor economic fundamentals (GDP was shrinking and COVID-19 ravaged the economy).[181] By late 2020 and into 2021, the bubble burst – the market crashed over 30% from its peak by early 2021, wiping out many small investors' savings. Allegations emerged that government insiders had benefited from selling at highs, causing public mistrust.[182][183]
After a period of stagnation, the stock market rallied again in 2023, with the main TEDPIX index reaching about 3.2 million points by early 2025.[184] However, trading volumes were often driven by inflation hedge motives rather than corporate earnings. In mid-June 2025, the exchange was shut down for 9 days during the war with Israel, and when it reopened after the ceasefire, the market plunged sharply. Within the first three days post-war, the TSE's benchmark index fell by over 200,000 points (≈7%) to around 2.79 million, despite daily trading limits that normally slow declines.[184] Panicked investors placed massive sell orders, on the first day back, sell orders outweighed buy orders by a 220:1 ratio (31.9 trillion tomans sell vs 0.145 trillion buy), indicating widespread flight from equities.[184] The post-war drop highlighted fragile confidence: even before the conflict, many retail investors doubted the rally's sustainability and kept funds out of the market.[184] The government intervened by limiting daily price moves to 3% and has at times injected liquidity via state funds to stabilize stocks. Yet, structural issues, such as lack of market depth, high inflation, and political risks, continue to make Iran's stock market volatile. Following the war, analysts argued that without genuine government support (e.g. large capital injections like those used to stabilize the currency), the market downturn could deepen, as the war's aftermath and ongoing sanctions deter both local and foreign investors.[184]
In 2024, Iran passed a law to make a two-day weekend. Saturday was added to Friday weekends and Thursdays were removed. The work week was reduced from 44 hours to 40/42 hours.[185][186]
The GDP of Iran contracted in FY 2018 and FY 2019 and modest rebound is expected in 2020/2021 according to an April 2020 World Economic Outlook by the IMF.[45]Challenges to the economy include theCOVID-19 outbreak starting in February 2020, which on top ofUS sanctions reimposed in mid-2018 and other factors, led a fall in oil production and are projected to lead to a slow recovery in oil exports.[39] Labor-force participation has risen[45] but unemployment is above 10% as of 2020 and projected to rise in 2021 and 2022.[45]
Inflation reached 41.1% in 2019, and is expected to continue "in the coming years" according to theWorld Bank,[39] but decline into the 34-33% range.[45] In July 2022, the average inflation rate rose 40.5% while the inflation rate for food and beverages alone rose 87%.[187][188]Iran's banking system is "chronically weak and undercapitalised" according toNordea Bank Abp,[45] holding billions of dollars of non-performing loans,[47] and the private sector remains "anemic".[45]
The unofficialIranian rial to US dollar exchange rate, which had plateaued at 40,000 to one in 2017, has fallen 120,000 to one as of November 2019.[49] Iran's economy has a relatively low rating in the Heritage Foundation's "Index of Economic Freedom" (164 out of 180);[50][45] and ease of doing business ranking (127 among 190) according to the World Bank.[51] Critics have complained thatprivatization has led not to state owned businesses being taken over by "skilled businesspeople" but by the powerfulIslamic Revolutionary Guard Corps "and its associates".[189]
In 2020, an Iranian businessperson complained to a foreign journalist (Dexter Filkins) that the uncertainty of "chronic shortages of material and unruly inspectors pushing for bribes" made operating his business very difficult -- "Plan for the next quarter? I can't plan for tomorrow morning."[189]
In 2021, according to theNIOC, daily consumption of gasoline in Iran has surpassed 85 million liters, i.e., 10 times more than Turkey with almost the same population.[190]
Following thehostilities with Iraq, the Government declared its intention to privatize most industries and toliberalize anddecentralize the economy.[194] Sale of state-owned companies proceeded slowly, mainly due to opposition by a nationalist majority in the parliament. In 2006, most industries, some 70% of the economy, remained state-owned.[38] The majority of heavy industries including steel, petrochemicals, copper, automobiles, and machine tools remained in the public sector, with most light industry privately owned.[38]
Article 44 of theIranian Constitution declares that the country's economy should consist of state, cooperative, and private based sectors. The state sector includes all large-scale industries, foreign trade, major minerals, banking, insurance, power generation, dams and large-scale irrigation networks, radio and television, post, telegraph and telephone services, aviation, shipping, roads, railroads and the like. These are publicly owned and administered by the State. Cooperative companies and enterprises concerned with production and distribution in urban and rural areas form the basis of the cooperative sector and operated in accordance withShariah law. As of 2012, 5,923 consumer cooperatives, employed 128,396.[195] Consumer cooperatives have over six million members.[195] Private sector operate in construction, agriculture, animal husbandry, industry, trade, and services that supplement the economic activities of the state and cooperative sectors.[196]
Since Article 44 has never been strictly enforced, the private sector has played a much larger role than that outlined in the constitution.[197] In recent years, the role of this sector has increased. A 2004 constitutional amendment allows 80% of state assets to be privatized. Forty percent of such sales are to be conducted through the "Justice Shares" scheme and the rest through theTehran Stock Exchange. The government would retain the remaining 20%.[198][199]
In 2005, government assets were estimated at $120 billion. Some $63 billion of such assets were privatized from 2005 to 2010, reducing the government's direct share of GDP from 80% to 40%.[citation needed] Many companies in Iran remain uncompetitive because of mismanagement over the years, thus making privatization less attractive for potential investors.[200] According to then-PresidentMahmoud Ahmadinejad, 60% ofIran's wealth is controlled by just 300 people.[201]
TheIslamic Revolutionary Guard Corps (IRGC) are thought to control aboutone third of Iran's economy through subsidiaries and trusts.[202][203][204] 2007 estimates by theLos Angeles Times suggest the IRGC has ties to over one hundred companies and annual revenue in excess of $12 billion, particularly in construction.[205] TheMinistry of Petroleum awarded the IRGC billions of dollars inno-bid contracts as well as major infrastructure projects.[206]
Tasked with border control, the IRGC maintains amonopoly on smuggling, costingIranian companies billions of dollars each year.[202] Smuggling is encouraged in part by thegenerous subsidization of domestic goods, includingfuel. The IRGC also runs thetelecommunication company, laser eye-surgery clinics, makes cars, builds bridges and roads and develops oil and gas fields.[207]
Welfare programs for the needy are managed by more than 30 public agencies alongside semi-state organizations known asbonyads, together with several private non-governmental organizations.Bonyads are a consortium of over 120 tax-exempt organizations that receive subsidies and religious donations. They answer directly to theSupreme Leader of Iran and control over 20% of GDP.[202][208] Operating everything from vast soybean and cotton farms to hotels, soft drink, automobile manufacturing, and shipping lines, they are seen as overstaffed, corrupt and generally unprofitable.[209]
Bonyad companies compete with Iran's unprotected private sector, whose firms complain of the difficulty of competing with the subsidizedbonyads.[209]Bonyads are not subject to audit orIran's accounting laws.[210]Setad is a multi-sector business organization, with holdings of 37 companies, and an estimated value of $95 billion. It is under the control of the Supreme Leader,Ali Khamenei, and created fromthousands of properties confiscated fromIranians.[211]
| Employment by sectors (2003)[65] | ||||
|---|---|---|---|---|
| sector | persons | |||
| Agriculture | 4,009,155 | |||
| Social, personal and household services &Public service | 3,934,317 | |||
| Mining &Manufacturing | 3,019,576 | |||
| Trade, restaurant & hotel | 2,820,927 | |||
| Construction & Real estate services | 2,395,144 | |||
| Transportation, warehousing &Telecommunications | 1,541,401 | |||
| Financial & monetary institutions services | 366,352 | |||
| Oil & gas | 136,803 | |||
| Electricity | 77,026 | |||
| Water | 63,510 | |||
| Labor force: 18,364,211 (total) note: Lack of skilled labor[212] | ||||
After the revolution, the government established a nationaleducation system that improved adult literacy rates. In 2008, 85% of the adult population was literate, well ahead of the regional average of 62%.[213][214] TheHuman Development Index was 0.749 in 2013, placing Iran in the "high human development" bracket.[44]
In 2008, annual economic growth of above 5% was necessary to absorb the 750,000 new labor force entrants each year.[215] In 2020, agriculture was 10% of GDP and employed 16% of the labor force.[6] In 2017, theindustrial sector, which includes mining, manufacturing, and construction, was 35% of GDP and employed 35% of the labor force.[6] In 2009, mineral products,notably petroleum, accounted for 80% of Iran's export revenues, even though mining employs less than 1% of the labor force.[65]
In 2004, the service sector ranked as the largest contributor to GDP, at 48% of the economy, and employed 44% of workers.[38]Women made up 33% of the labor force in 2005.[216] Youth unemployment, aged 15–24, was 29.1% in 2012, resulting in significantbrain drain.[38][217] In 2016, according to the government, some 40% of the workforce in thepublic sector are either in excess or incompetent.[218]
The Islamic Republic of Iran employs around 8 million individuals, of whom roughly 3 million hold formal positions within the three branches of government, the armed forces, and leadership institutions. These roles encompass bureaucratic staff, civil servants, and uniformed military personnel.[219]
Beyond the formal government structure, approximately 2.3 million individuals are employed in quasi-governmental organizations, including state-owned enterprises, national banks, municipalities, and theIslamic Azad University. Additionally, about 2.5 million pensioners receive state stipends, often distributed through the Relief Committee, a government-controlled charitable organization. As a result, nearly one in ten Iranian citizens maintain a regular financial connection to the state.[219]
Unemployment in Iran has remained at high single digits officially, but underemployment and joblessness among youth are significant concerns. However, this headline figure masks labor force dropout: over 38 million working-age Iranians (especially women and youth) are economically inactive, and only 25 million were employed, indicating a very low labor participation rate (around 41%).[220][221] Youth unemployment is much higher: for ages 18–35 it was around 15%, and for 15–24 year-olds about 20% in 2024–25 (with young women's jobless rate even higher, near 35%).[222]
Iran is classed as amiddle income country and has made significant progress in provision of health and education services in the period covered by theMillennium Development Goals (MDGs). In 2010, Iran's average monthly income was about $500. TheGNI per capita in 2012 was $13,000, byPPP.[38][223][224][225] A minimum national wage applies to each sector of activity as defined by the Supreme Labor Council. In 2009 this was about $263 per month ($3,156 per year).[226]
In 2001, approximately 20% of household consumption was spent on food, 32% on fuel, 12% on health care and 8% on education.[227] In 2015, Iranianshad little personal debt.[228] In 2007, seventy percent of Iranians ownedtheir homes.[229]
In 2018–2019, the median household income of Iran was 434,905,000 rials (a bit above $3,300), an 18.6% rise from 2017 to 2018, when median household income was about 366,700,000 rials.[citation needed] Adjusted forpurchasing power parity, Iran's 2017–2018 median income was equivalent to about $28,647 (2017 conversion factor, private consumption, LCU).[230]
As the average Iranian household size is 3.5, this puts median personal income at around $8,185.[231] While Iran rates relatively well on income,median wealth is very low for its income level, on par with Vietnam or Djibouti, indicating a high level of spending. According to SCI, median household spending in 2018 was 393,227,000 rials, or 90.5% of the median household income of 434,905,000 rials.[citation needed]
After the Revolution, the composition of themiddle class in Iran did not change significantly, but its size doubled from about 15% of the population in 1979 to more than 32% in 2000.[232] In 2008, the official poverty line inTehran for 2008 was $9,612. The national average poverty line was $4,932.[233] In 2010, Iran's Department of Statistics announced that 10 million Iranians live under theabsolute poverty line and 30 million live under therelative poverty line.[234]
Salaries and wages in Iran have not kept up with inflation, causing a steep decline in real purchasing power. The government sets a national minimum wage annually through the Supreme Labor Council.[235] In March 2024, the minimum monthly wage was raised by 35% to 11,107,000 rials (about \$185 at the time, including certain benefits).[236] However, due to rapid rial depreciation, by late 2024 that amount was worth only ~$137, while the cost of living spiked causing a real decrease of wages.[237] Labor organizations note the minimum wage that once covered roughly half of a family's basic expenses now covers only one-quarter or less of essential costs.[236]
According the inequality dataset of theworld bank, in 2002 theGini index in Iran was 34.8, a level that is considered to be quite modest. However, closer data analysis reveals significant wealth concentration, with the top 10% of earners holding 52.7% of the national income - a larger share than in theUnited States orEuropean countries.[238]
Iran's Gini coefficient fell from ~0.50 in the late 1970s to ~0.40 by the mid-1980s. In the 2000s, inequality fluctuated around a Gini index of 0.38–0.40. In the late 2010s and 2020s, some official data suggested a slight decline in the Gini (possibly due to overall economic contraction hitting higher incomes). The World Bank estimated Iran's Gini index at around 36.0 in 2019, improving to 34.8 in 2022 (on a 0–100 scale where higher is more unequal).[239]
Economic disparity is also evident within the public sector. Many Iranian state employees face significant financial hardship, with salaries as low as $200 per month, however, someMajlis representatives receive monthly salaries ranging from 200 to 250 million tomans (or more than $59,172 according to the exchange rate of January 2024).[240] Additionally, they receive extra bonuses during religious holidays and on "Parliament Day" and "Employee Day," along withperquisites likeNowruz andYalda Night snacks.[241]
Inequality is also evident in access to essential services such aswater supply. InTehran impoverished districts struggle with inadequate water provision and hazardous water quality, while affluent areas, housing many of the nation's economic elite, including high-ranking government andIslamic Revolutionary Guard Corps (IRGC) officials, are largely unaffected by these shortages.[242]
The government has a sizable social transfer system (subsidies for fuel, bread, cash handouts introduced in 2010, etc.) which has helped limit extreme inequality.[243][244] However, wealth inequality is believed to be more pronounced – a small subset connected to power and business conglomerates (like religious foundations and the Revolutionary Guard's businesses) control significant assets, while many Iranians struggle. Notably, inequalities between urban and rural areas and between provinces persist.[245][246][247]
Poverty levels in Iran have risen in recent years amid sanctions and inflation, after some improvements in the 2000s. The Research Center of Iran's Parliament reported that poverty reached 30.1% of the population in 2023, up from about 26% in 2018, meaning around 25–27 million people unable to meet basic needs.[248] Over 5 years, the poverty rate hovered around 30%, indicating persistent hardship. The World Bank estimated that in 2018, only 0.5% of Iranians lived on under $1.90/day (extreme poverty), but by 2021 the share living under the upper-middle-income country poverty line (~$6.85/day) had increased sharply due to inflation.[85] By March 2022, Iranian media reported over 32 million people (around 38% of the population) were below the poverty line when considering the ability to afford essentialfood and housing, as inflation in food prices outpaced incomes.[249]
Malnutrition in Iran has been reported as a growing social and economic issue amid the country’s ongoing economic crisis. In August 2025, the Iranian newspaperShargh, citing surveys conducted by NGOs and volunteer groups, highlighted severe deficiencies in food access and nutrition, particularly protein intake, across the population.[250] The study revealed that only 1.7% of households reported daily protein consumption. About 27% of households reported noprotein intake at all. Among households with temporary employment, over 93% consumed protein less than once a week or not at all. In unemployed households, this figure rose to 95%.[250]
Although Iran does not offer universal social protection, in 1996, the Iranian Center for Statistics estimated that more than 73% of the Iranian population was covered by social security.[251] Membership of the social security system for all employees is compulsory.[252]
Social security ensures employee protection against unemployment, disease, old age and occupational accidents.[253] In 2003, the government began to consolidate its welfare organizations to eliminate redundancy and inefficiency. In 2003 the minimum standard pension was 50% of the worker's earnings but no less than the minimum wage.[253] Iran spent 22.5% of its 2003 nationalbudget onsocial welfare programs of which more than 50% covered pension costs.[254] Out of the 15,000 homeless in Iran in 2015, 5,000 werewomen.[255]
Employees between the age of 18 and 65 years are covered by the social security system with financing shared between the employee (7% of salary), the employer (20–23%) and the state, which in turn supplements the employer contribution up to 3%.[256] Social security applies to self-employed workers, who voluntarily contribute between 12% and 18% of income depending on the protection sought.[253]Civil servants, the regular military, law enforcement agencies, and IRGC have their own pension systems.[257]
Although Iranian workers have a theoretical right to form labor unions, there is no union system in the country. Ostensible worker representation is provided by theWorkers' House, a state-sponsored institution that attempts to challenge some state policies.[258]Guild unions operate locally in most areas, but are limited largely to issuing credentials and licenses. The right to strike is generally not respected by the state. Since 1979 strikes have often been met by police action.[259]
A comprehensive law covers labor relations, including hiring of foreign workers. This provides a broad and inclusive definition of the individuals it covers, recognizing written, oral, temporary and indefinite employment contracts. Considered employee-friendly, the labor law makes it difficult to lay off staff. Employing personnel on consecutive six-month contracts (to avoid paying benefits) is illegal, as is dismissing staff without proof of a serious offense. Labor disputes are settled by a special labor council, which usually rules in favor of the employee.[252]
Agriculture contributes 9.5% to thegross domestic product and employs 17% of the labor force.[45] About 9% of Iran's land is arable,[260] with the main food-producing areas located in theCaspian region and in northwestern valleys. Some northern and western areas support rain-fed agriculture, while others requireirrigation.[261]Primitive farming methods, overworked and under-fertilized soil, poor seed and water scarcity are the principal obstacles to increased production. About one third of total cultivated land is irrigated. Construction of multipurposedams and reservoirs along rivers in theZagros andAlborz mountains have increased the amount of water available for irrigation. Agricultural production is increasing as a result of modernization, mechanization, improvements to crops and livestock as well as land redistribution programs.[262]
Wheat, the most important crop, is grown mainly in the west and northwest. Rice is the major crop in the Caspian region. Other crops include barley, corn, cotton, sugar beets, tea, hemp, tobacco, fruits, potatoes, legumes (beans and lentils), vegetables, fodder plants (alfalfa and clover), almonds, walnuts and spices includingcumin andsumac. Iran is the world's largest producer ofsaffron,pistachios, honey,berberis andberries and the second largest date producer.[263] Meat and dairy products include lamb, goat meat, beef, poultry, milk, eggs, butter, and cheese.
Non-food products include wool, leather, and silk. Forestry products from the northern slopes of theAlborz Mountains are economically important. Tree-cutting is strictly controlled by the government, which also runs areforestation program. Rivers drain into the Caspian Sea and are fished for salmon, carp, trout, pike, and sturgeon that producecaviar, of which Iran is the largest producer.[262][264]
Since the 1979 revolution, commercial farming has replaced subsistence farming as the dominant mode of agricultural production. By 1997, the gross value reached $25 billion.[65] Iran is 90% self-sufficient in essential agricultural products, although limited rice production leads to substantial imports. In 2007 Iran reached self-sufficiency in wheat production and for the first time became a net wheat exporter.[265] By 2003, a quarter of Iran's non-oil exports were of agricultural products,[266] including fresh and dried fruits, nuts, animal hides, processed foods, and spices.[65] Iran exported $736 million worth offoodstuffs in 2007 and $1 billion (~600,000 tonnes) in 2010.[267] A total of 12,198 entities are engaged in theIranian food industry, or 12% of all entities in theindustry sector. The sector also employs approximately 328,000 people or 16.1% of theentire industry sector's workforce.[268]
Large-scale factory manufacturing began in the 1920s. During theIran–Iraq War, Iraq bombed many ofIran's petrochemical plants, damaging the largeoil refinery at Abadan bringing production to a halt. Reconstruction began in 1988 and production resumed in 1993. In spite of the war, many small factories sprang up to produce import-substitution goods and materials needed by the military.[citation needed]
Iran's major manufactured products are petrochemicals, steel and copper products. Other important manufactures include automobiles, home and electric appliances, telecommunications equipment, cement and industrial machinery. Iran operates the largest operational population of industrial robots in West Asia.[269] Other products include paper, rubber products, processed foods,leather products andpharmaceuticals. In 2000,textile mills, using domestic cotton and wool such asTehran Patou andIran Termeh employed around 400,000 people around Tehran,Isfahan and along the Caspian coast.[270][271]
A 2003 report by theUnited Nations Industrial Development Organization regardingsmall and medium-sized enterprises (SMEs)[212] identified the following impediments to industrial development:
Despite these problems, Iran has progressed in variousscientific and technological fields, includingpetrochemical,pharmaceutical,aerospace,defense, andheavy industry. Even in the face ofeconomic sanctions, Iran is emerging as anindustrialized country.[272]
Iran has a long tradition of producingartisanal goods includingPersian carpets,ceramics, copperware, brassware, glass, leather goods, textiles and wooden artifacts. The country's carpet-weaving tradition dates from pre-Islamic times and remains an important industry contributing substantial amounts to rural incomes. An estimated 1.2 million weavers in Iran produce carpets for domestic and international export markets.[citation needed] More than $500 million worth of hand-woven carpets are exported each year, accounting for 30% of the 2008 world market.[273][274] Around 5.2 million people work in some 250 handicraft fields and contribute 3% of GDP.[citation needed]
As of 2001, 13 public and privately owned automakers within Iran, led byIran Khodro andSaipa that accounted for 94% of domestic production. Iran Khodro'sPaykan, replaced by theSamand in 2005, is the predominant brand. With 61% of the 2001 market, Khodro was the largest player, whilst Saipa contributed 33% that year. Other car manufacturers, such as theBahman Group, Kerman Motors,Kish Khodro, Raniran, Traktorsazi, Shahab Khodro and others accounted for the remaining 6%.[275]
These automakers produce a wide range of vehicles including motorbikes, passenger cars such as Saipa'sTiba, vans, mini trucks, medium-sized trucks, heavy trucks, minibuses, large buses and other heavy automobiles used for commercial and private activities in the country. In 2009 Iran ranked fifth in car production growth after China, Taiwan, Romania and India.[276] Iran was the world's12th biggest automaker in 2010 and operates a fleet of 11.5 million cars.[277][278][279][280] Iran produced 1,395,421 cars in 2010, including 35,901 commercial vehicles.[citation needed]
In 2007 theInternational Institute for Strategic Studies estimated Iran's defense budget at $7.31 billion, equivalent to 2.6% of GDP or $102 per capita, ranking it 25th internationally. The country'sdefense industry manufactures many types of arms and equipment. Since 1992, Iran'sDefense Industries Organization (DIO) has produced its own tanks, armored personnel carriers,guided missiles, radar systems, guided missile destroyers, military vessels, submarines and fighter planes.[281] In 2006 Iran exported weapons to 57 countries, includingNATO members, and exports reached $100 million.[282][283] It has also developed a sophisticated mobileair defense system dubbed asBavar 373.[284]
.jpg)
Until the early 1950s construction remained in the hands of small domestic companies. Increased income from oil and gas and easy credit triggered a building boom that attracted international construction firms to the country. This growth continued until the mid-1970s when a sharp rise in inflation and a credit squeeze collapsed the boom. The construction industry had revived somewhat by the mid-1980s, although housing shortages and speculation remained serious problems, especially in large urban centers. As of January 2011, thebanking sector, particularlyBank Maskan, had loaned up to 102 trillion rials ($10.2 billion) to applicants ofMehr housing scheme.[285] Construction is one of the most important sectors accounting for 20–50% of total private investment in urban areas and was one of the prime investment targets of well-off Iranians.[254]
Annual turnover amounted to $38.4 billion in 2005 and $32.8 billion in 2011.[286][287] Because of poor construction quality, many buildings need seismic reinforcement or renovation.[288] Iran has a largedam building industry.[289]
Mineral production contributed 0.6% of the country's GDP in 2011,[citation needed] a figure that increases to 4% when mining-related industries are included. Gating factors include poor infrastructure, legal barriers, exploration difficulties, and government control over all resources.[291] Iran is ranked among the world's 15 major mineral-rich countries.[292]
Although the petroleum industry provides the majority of revenue, about 75% of all mining sector employees work in mines producing minerals other than oil and natural gas.[65] These include coal, iron ore, copper, lead, zinc, chromium,barite, salt,gypsum,molybdenum,strontium,silica, uranium, and gold, the latter of which is mainly a by-product of theSar Cheshmeh copper complex operation.[293] The mine at Sar Cheshmeh inKerman Province is home to the world's second largest store of copper.[294]Large iron ore deposits exist in central Iran, near Bafq,Yazd and Kerman. The government owns 90% of all mines and related industries and is seeking foreign investment.[291] The sector accounts for 3% of exports.[291]
In 2019, the country was the 2nd largest world producer ofgypsum;[295] the 8th largest world producer ofmolybdenum;[296] the world's 8th largest producer ofantimony;[297] the 11th largest world producer ofiron ore;[298] the 18th largest world producer ofsulfur,[299] in addition to being the 21st largest worldwide producer ofsalt.[300] It was the 13th largest producer in the world ofuranium in 2018.[301]
Iran has recoverable coal reserves of nearly 1.9 billion short tonnes. By mid-2008, the country produced about 1.3 million short tonnes of coal annually and consumed about 1.5 million short tonnes, making it a net importer.[302] The country plans to increase hard-coal production to 5 million tons in 2012 from 2 million tons in November 2008.[303]
The main steel mills are located in Isfahan andKhuzestan. Iran became self-sufficient in steel in 2009.[304] Aluminum and copper production are projected to hit 245,000 and 383,000 tons respectively by March 2009.[303][305] Cement production reached 65 million tons in 2009, exporting to 40 countries.[305][306]
Iran manufactures 60–70% of its equipment domestically, including refineries, oil tankers, drilling rigs, offshore platforms, and exploration instruments.[307][308][309][310]
Based on a fertilizer plant inShiraz, the world's largestethylene unit, inAsalouyeh, and the completion of otherspecial economic zone projects, Iran's exports in petrochemicals reached $5.5 billion in 2007, $9 billion in 2008 and $7.6 billion during the first ten months of theIranian calendar year 2010.[311]National Petrochemical Company's output capacity will increase to over 100 million tpa by 2015 from an estimated 50 million tpa in 2010 thus becoming the world' second largest chemical producer globally afterDow Chemical with Iran housing some of the world's largest chemical complexes.[118]
Major refineries located atAbadan (site of its first refinery), Kermanshah and Tehran failed to meet domestic demand for gasoline in 2009. Iran's refining industry requires $15 billion in investment over the period 2007–2012 to become self-sufficient and end gasoline imports.[312] Iran has the fifth cheapestgasoline prices in the world leading tofuel smuggling with neighboring countries.[313]
In November 2019, Iran raised the gasoline prices by 50% and imposeda strict rationing system again, as in 2007. The prices per liter gasoline rose to 15,000 rials, where only 60 liters were permitted to private cars for a month. Besides, oil purchase beyond the limit would cost 30,000 rials per liter. Those prices are still well belowtarget prices set in the subsidy reform plan, however. The policy changes came in effect to theUS sanctions, and caused protests across the country.[314] The result of the rationing, a year later, was reduced pollution and wasteful domestic consumption and increase in exports.[315]
Despite 1990s efforts towards economic liberalization, government spending, including expenditure by quasi-governmental foundations, remains high. Estimates of service sector spending in Iran are regularly more than two-fifths of GDP, much government-related, including military expenditures, government salaries, and social security disbursements.[38] Urbanization contributed to service sector growth. Important service industries include public services (including education), commerce, personal services, professional services and tourism.
The total value of transport and communications is expected to rise to $46 billion in nominal terms by 2013, representing 6.8% of Iran's GDP.[316] Projections based on 1996 employment figures compiled for theInternational Labour Organization suggest that Iran's transport and communications sector employed 3.4 million people, or 20.5% of the labor force in 2008.[316]
Electricity – production by source:
Oil:
Natural gas:
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Iran possesses 10% of the world'sproven oil reserves and 15% of itsgas reserves.[27]Domestic oil and gas along with hydroelectric power facilities provide power.[27]Energy wastage in Iran amounts to six or seven billion dollars per year,[318] much higher than the international norm.[98] Iran recycles 28% of its used oil and gas, whereas some other countries reprocess up to 60%.[318] In 2008 Iran paid $84 billion insubsidies for oil, gas and electricity.[35] It is the world's third largest consumer of natural gas after United States and Russia.[38] In 2010 Iran completed its firstnuclear power plant at Bushehr with Russian assistance.[319]
Iran has been a major oil exporter since 1913. The country's major oil fields lie in the central and southwestern parts of the westernZagros mountains. Oil is also found in northern Iran and in thePersian Gulf. In 1978, Iran was the fourth largest oil producer,OPEC's second largest oil producer and second largest exporter.[320] Following the 1979 revolution the new government reduced production. A further decline in production occurred as result of damage to oil facilities during the Iraq-Iran war.[321]
Oil production rose in the late 1980s as pipelines were repaired and newGulf fields exploited. By 2004, annual oil production reached 1.4 billion barrels producing a net profit of $50 billion.[321] Iranian Central Bank data show a declining trend in the share of Iranian exports from oil-products (FY 2006: 84.9%, 2007/2008: 86.5%, 2008/2009: 85.5%, 2009/2010: 79.8%, FY 2010 (first three quarters): 78.9%).[322] Iranian officials estimate thatIran's annual oil and gas revenues could reach $250 billion by 2015 oncecurrent projects come on stream.[112]
Pipelines move oil from the fields to therefineries and to such exporting ports as Abadan, Bandar-e Mashur andKharg Island. Since 1997,Iran's state-owned oil and gas industry has entered into major exploration and production agreements withforeign consortia.[323][324] In 2008 theIranian Oil Bourse (IOB) was inaugurated inKish Island.[325] The IOB trades petroleum, petrochemicals and gas in various currencies. Trading is primarily in theeuro and rial along with other major currencies, not including theUS dollar.[citation needed] According to thePetroleum Ministry, Iran plans to invest $500 billion in its oil sector by 2025.[326]
As of August 2025 the crude oil price declined by 15.44% since August 2024.[327] In addition, theInternational Energy Agency (IEA) says global demand in 2025 is expected to grow by less than 700,000 barrels per day (bpd), while supply is set to rise by 2.5 million bpd— resulting in a surplus of more than 1.8 million bpd and consequently, a further decline in oil price is expected.[328] The decline of oil price is expected to further aggravate Iran's economic situation since Iran is heavily dependent on Chinese refiners that take advantage on Iran's difficulties to sell oil in the global markets.[328]
Iran's retail industry consists largely of cooperatives (many of themgovernment-sponsored), and independent retailers operating inbazaars. The bulk of food sales occur at street markets with prices set by the Chief Statistics Bureau. Iran has 438,478 small grocery retailers.[329] These are especially popular in cities other than Tehran where the number of hypermarkets and supermarkets is still very limited. More mini-markets and supermarkets are emerging, mostly independent operations. The biggest chainstores are state-owned Etka,Refah,Shahrvand andHyperstar Market.[329]Electronic commerce in Iran passed the $1 billion mark in 2009.[330]
In 2012, Iranians spent $77 billion on food, $22 billion on clothes and $18.5 billion onoutward tourism.[331] In 2015, overallconsumer spending anddisposable income are projected at $176.4 billion and $287 billion respectively.[332]
| IRAN: Healthcare (Source:EIU)[333] | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 |
|---|---|---|---|---|---|---|
| Life expectancy, average (years) | 70.0 | 70.3 | 70.6 | 70.9 | 71.1 | 71.4 |
| Healthcare spending (% of GDP) | 4.2 | 4.2 | 4.2 | 4.2 | 4.2 | 4.2 |
| Healthcare spending ($ per head) | 113 | 132 | 150 | 191 | 223 | 261 |
The constitution entitles Iranians to basichealth care. By 2008, 73% of Iranians were covered by the voluntary national health insurance system.[333] Although over 85% of the population use an insurance system to cover their drug expenses, the government heavily subsidizes pharmaceutical production/importation. The total market value ofIran's health and medical sector was $24 billion in 2002 and was forecast to rise to $50 billion by 2013.[334][335] In 2006, 55pharmaceutical companies in Iran produced 96% (quantitatively) of the medicines for a market worth $1.2 billion.[333][336][337] This figure is projected to increase to $3.65 billion by 2013.[335]
According to Hataminia, S., & Mohammadzadeh Asl, N. (2025), the deteriorating economic indicator of Iran especially, inflation and unemployment rates exert significant negative effects on life expectancy.[338]
Although tourism declined significantly during the war with Iraq, it has subsequently recovered. About 1,659,000 foreign tourists visited Iran in 2004 and 2.3 million in 2009 mostly from Asian countries, including the republics ofCentral Asia, while about 10% came from the European Union and North America.[76][339]
The most popular tourist destinations areMazandaran,Isfahan,Mashhad andShiraz.[340] In the early 2000s the industry faced serious limitations in infrastructure, communications, industry standards and personnel training.[261] Several organized tours from Germany, France and other European countries come to Iran annually to visit archaeological sites and monuments. In 2003 Iran ranked 68th in tourism revenues worldwide.[341] According toUNESCO and the deputy head of research forIran Travel and Tourism Organization (ITTO), Iran is rated among the "10 most touristic countries in the world".[341]Domestic tourism in Iran is one of the largest in the world.[342]
Government loans and credits are available to industrial and agricultural projects, primarily through banks. Iran's unit of currency is therial which had an average official exchange rate of 9,326 rials to the U.S. dollar in 2007.[38] Rials are exchanged on the unofficial market at a higher rate. In 1979, the government nationalized private banks. The restructured banking system replaced interest on loans with handling fees, in accordance withIslamic law. This system took effect in the mid-1980s.[56]
Thebanking system consists of a central bank, theBank Markazi, which issues currency and oversees allstate and private banks, as well as theOrganization of Islamic Economics which acts as a sort of central bank for issuingQard al-Hasan, as a parallel system in the banking sector, operating outside the purview of the Central Bank.[88] It supervises 1200, out of 2500 Islamic loan funds, on behalf of Iran's Central Bank.[345] Several commercial banks have branches throughout the country. Two development banks exist and a housing bank specializes in home mortgages. The government began toprivatize the banking sector in 2001 when licenses were issued to two new privately owned banks.[346]
State-owned commercial banks predominantly make loans to the state,bonyad enterprises, large-scale private firms and four thousand wealthy/connected individuals.[347][348] While mostIranians have difficulty obtaining small home loans, 90 individuals secured facilities totaling $8 billion.[citation needed] In 2009,Iran's General Inspection Office announced thatIranian banks held some $38 billion of delinquent loans, with capital of only $20 billion.[citation needed]
Foreign transactions with Iran amounted to $150 billion of major contracts between 2000 and 2007, including private and government lines of credit.[349] In 2007, Iran had $62 billion in assets abroad.[350] In 2010, Iran attracted almost $11.9 billion from abroad, of which $3.6 billion wasFDI, $7.4 billion was from international commercial bank loans, and around $900 million consisted of loans and projects from international development banks.[351]
As of 2010, theTehran Stock Exchange traded the shares of more than 330 registered companies.[344] Listed companies were valued at $100 billion in 2011.[352]
Insurance premiums accounted for just under 1% of GDP in 2008,[302] a figure partly attributable to low average income per head.[302] Five state-owned insurance firms dominate the market, four of which are active in commercial insurance. The leading player is the Iran Insurance Company, followed by Asia, Alborz and Dana insurances. In 2001/02 third-party liability insurance accounted for 46% of premiums, followed by health insurance (13%), fire insurance (10%) and life insurance (9.9%).[346]
Broadcast media, including five national radio stations and five national television networks as well as dozens of local radio and television stations are run by the government. In 2008, there were 345 telephone lines and 106 personal computers for every 1,000 residents.[353] Personal computers for home use became more affordable in the mid-1990s, since when demand for Internet access has increased rapidly. As of 2010, Iran also had the world's third largest number ofbloggers (2010).[354]
In 1998, the Ministry of Post, Telegraph & Telephone, later renamed theMinistry of Information & Communication Technology, began selling Internet accounts to the general public. In 2006, revenues from the Iranian telecom industry were estimated at $1.2 billion.[355] In 2006, Iran had 1,223 Internet Service Providers (ISPs), all private sector operated.[356] As of 2014, Iran has the largest mobile market in the Middle East, with 83.2 million mobile subscriptions and 8 million smart-phones in 2012.[357]
According to the World Bank, Iran's information and communications technology sector had a 1.4% share of GDP in 2008.[353] Around 150,000 people work in this sector, including 20,000 in the software industry.[358] 1,200 IT companies were registered in 2002, 200 in software development. In 2014 software exports stood at $400 million.[citation needed] By the end of 2009, Iran's telecom market was the fourth-largest in the Middle East at $9.2 billion and was expected to reach $12.9 billion by 2014 at a compound annual growth rate of 6.9%.[359]
Iran has an extensive paved road system linking most towns and all cities. In 2011, the country had 173,000 kilometres (107,000 mi) of roads, of which 73% were paved. In 2007 there were approximately 100 passenger cars for every 1,000 inhabitants.[277] Trains operated on 11,106 kilometres (6,901 mi) of track.[38]
Iran's major port of entry isBandar-Abbas on theStrait of Hormuz. After arriving in Iran, imported goods are distributed by trucks and freight trains. The Tehran–Bandar-Abbas railroad, opened in 1995, connects Bandar-Abbas toCentral Asia via Tehran andMashhad. Other major ports includeBandar Anzali andBandar Torkaman on the Caspian Sea andKhoramshahr andBandar Imam Khomeini on thePersian Gulf.
Dozens of cities have passenger and cargo airports.Iran Air, the national airline, was founded in 1962 and operates domestic and international flights. All large cities have bus transit systems and private companies provide intercity bus services. Tehran, Mashhad,Shiraz,Tabriz,Ahvaz and Isfahan are constructing underground railways. More than one million people work in the transportation sector, accounting for 9% of 2008 GDP.[360]
In August 2022, PresidentEbrahim Raisi's cabinet approved a law to import fully assembled foreign cars. His predecessor PresidentHassan Rouhani, had outlawed such imports in July 2018 due tosanctions imposed on Iran. Regular Iranian citizens were unable to buy safe cars at affordable prices.[361]
Iran is a founding member ofOPEC and theOrganization of Gas Exporting Countries.[362]Petroleum constitutes 56% of Iran's exports with a value of $60.2 billion in 2018.[17] For the first time, the value of Iran's non-oil exports is expected to reach the value of imports at $43 billion in 2011.[363]Pistachios, liquefied propane, methanol (methyl alcohol),hand-woven carpets andautomobiles are the major non-oil exports.[364]Copper,cement,leather,textiles,fruits,saffron andcaviar are also export items of Iran.
Technical and engineering service exports in FY 2007 were $2.7 billion of which 40% of technical services went to Central Asia and the Caucasus, 30% ($350 million) to Iraq, and close to 20% ($205 million) to Africa.[365]Iranian firms have developedenergy, pipelines, irrigation, dams andpower generation in different countries. The country has made non-oil exports a priority[102] by expanding its broad industrial base, educated and motivated workforce and favorable location, which gives it proximity to an estimated market of some 300 million people inCaspian, Persian Gulf and someECO countries further east.[366][367]
Total import volume rose by 189% from $13.7 billion in 2000 to $39.7 billion in 2005 and $55.189 billion in 2009.[368] Iran's major commercial partners areChina,France,Germany,India,Italy,Japan,Russia, andSouth Korea. From 1950 until 1978, theUnited States was Iran's foremost economic and military partner, playing a major role in infrastructure and industry modernization.[57][58] It is reported that around 80% of machinery and equipment in Iran is of German origin.[369]In March 2018, Iran had banned Dollar in trade.[370] In July 2018, France, Germany and the UK agreed to continue trade with Iran without using Dollar as a medium of exchange.[371]
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Since the mid-1990s, Iran has increased its economic cooperation with otherdeveloping countries in "South–South integration" includingSyria, India,China,South Africa,Cuba, andVenezuela. Iran's trade with India passed $13 billion in 2007, an 80% increase within a year.[citation needed] Iran is expanding its trade ties withTurkey andPakistan and shares with its partners the common objective to create a common market in West and Central Asia throughECO.[citation needed]
Since 2003,Iran has increased investment in neighboring countries such as Iraq and Afghanistan. InDubai,UAE, it is estimated thatIranian expatriates handle over 20% of its domestic economy and account for an equal proportion of its population.[373][374] Migrant Iranian workers abroad remitted less than $2 billion home in 2006.[375] Between 2005 and 2009, trade between Dubai and Iran tripled to $12 billion; money invested in the local real estate market and import-export businesses, collectively known as theBazaar, and geared towards providing Iran and other countries with required consumer goods.[376] It is estimated thatone third of Iran's imported goods and exports are delivered through theblack market, underground economy, and illegal jetties, thusdamaging the economy.[202]
Iran had an estimated $110 billion inforeign reserves in 2011[164] and balances itsexternal payments by pricing oil at approximately $75 per barrel.[165] As of 2013, only $30 to $50 billion of those reserves are accessible because of current sanctions.[166]Iranian media has questioned the reason behind Iran's government non-repatriation ofits foreign reserves before the imposition of thelatest round of sanctions and its failure to convert intogold. As a consequence, theIranian rial lost more than 40% of its value between December 2011 and April 2012.[137]
The current account was expected to reach a surplus of 2.1% of GDP in FY 2012, and the net fiscal balance (after payments to Iran'sNational Development Fund) will register a surplus of 0.3% of GDP.[71] In 2013 theexternal debts stood at $7.2 billion down from $17.3 billion in 2012.[167] Overallfiscal deficit is expected to deteriorate to 2.7% of GDP in FY 2016 from 1.7% in 2015.[168]
Money in circulation reached $700 billion in March 2020 (based on the 2017pre-devaluation exchange rate), thus furthering the decline of theIranian rial and rise in inflation.[169][170]
In the 1990s and early 2000s, indirect oilfield development agreements were made with foreign firms, includingbuyback contracts in the oil sector whereby the contractor provided project finance in return for an allocated production share. Operation transferred toNational Iranian Oil Company (NIOC) after a set number of years, completing the contract.[377]
Unfavorable or complex operating requirements andinternational sanctions have hinderedforeign investment in the country, despite liberalization of relevant regulations in the early 2000s. Iran absorbed $24.3 billion of foreign investment between theIranian calendar years 1993 and 2007.[378] TheEIU estimates that Iran's net FDI will rise by 100% between 2010 and 2014.[379]
Foreign investors concentrated their activities in the energy, vehicle manufacture, copper mining, construction, utilities, petrochemicals, clothing, food and beverages, telecom and pharmaceuticals sectors. Iran is a member of the World Bank'sMultilateral Investment Guarantee Agency.[380] In 2006, the combined net worth ofIranian citizens abroad was about 1.3 trillion dollars.[381]
According to the head ofthe Organization for Investment, Economic and Technical Assistance of Iran (OIETAI), in 2008 Iran ranked 142 among 181 countries in working conditions. Iran stands at number 96 in terms of business start-ups, 165 in obtaining permits, 147 in employment, 147 in asset registration, 84 in obtaining credit, 164 in legal support for investments, 104 in tax payments, 142 in overseas trade, 56 in contract feasibility and 107 in bankruptcy.[382] Firms from over 50 countries invested in Iran between 1992 and 2008, with Asia and Europe the largest participants as shown below:[383]
| Continent of origin | Leading countries investing in Iran (1992–2008) | Number of projects | Total amount invested |
|---|---|---|---|
| Asia | India, United Arab Emirates (UAE), Singapore, Indonesia and Oman | 190 | $11.6 billion |
| Europe | Germany, the Netherlands, Spain, UK, Turkey, Italy and France (20 countries in total) | 253 | $10.9 billion |
| Americas | Canada, Panama, the US and Jamaica | 7 | $1.4 billion |
| Africa | Mauritius, Liberia and South Africa | — | $8 billion |
| Australia | Australia | 1 | $682 million |
The economic impact of a partiallifting of sanctions extends beyond the energy sector;The New York Times reported that "consumer-oriented companies, in particular, could find opportunity in this country with 81 million consumers, many of whom are young and prefer Western products".[384] The consumer-goods market is expected to grow by $100 billion by 2020.[385]
In 2015, Iran was considered "a strongemerging market play" by investment and trading firms.[386] Opening Iran's market place toforeign investment could also be a boon to competitive multinational firms operating in a variety of manufacturing and service sectors, worth $600 billion to $800 billion in new investment opportunities over the next decade.[387][388][389][390]
In the 2000s, during high oil prices, Iran's central bank built up reserves well above $100 billion.[88] However, sanctions after 2012 cut Iran's access to much of its money (funds accumulated from oil sales in countries like China, India, South Korea were locked or could only be used for limited purchases).[391] In 2018, when the U.S. reimposed banking sanctions, Iran's usable reserves shrank dramatically – at one point in 2020, the IMF estimated Iran had as little as $4 billion in accessible reserves (excluding gold and illiquid assets).[392] After 2021, higher oil exports to China allowed some rebuilding of reserves. By late 2024, Iran's total international reserves (including gold and deposits abroad) were estimated at around $26 billion, rising to a projected $34 billion in 2025 as per IMF data – though not all of that is readily deployable.[393]
Lack of reserve access has contributed to Iran's currency volatility; the central bank has limited ability to intervene in the open market with dollars or euros.[394] In late 2023, a deal with the U.S. allowed Iran to repatriate about $6 billion of its funds from South Korea (in exchange for a prisoner release), but those funds were designated for humanitarian trade only.[395] Iran's oil export revenue (mostly in yuan from China) is partly kept offshore to finance imports from those countries.[396]
Facing this, the Central Bank of Iran has tried tactics like currency swap agreements with allies, efforts to ditch the U.S. dollar in trade (using barter or currencies like yuan/rouble), and even reportedly buying cryptocurrencies as alternative reserve assets.[397] In 2022, the bank also raised interest rates and banned private exchange trading for a period to slow capital flight.[398] Yet capital flight persisted – an estimated $14 billion left Iran in 2024 and $20 billion in 2023 as people sought safer assets abroad, reflecting low confidence in the rial.[398]
Iran has held observer status at theWorld Trade Organization (WTO) since 2005. Although the United States has consistently blocked its bid to join the organization, observer status came in a goodwill gesture to ease nuclear negotiations between Iran and the international community.[399] With exports of 60 products with revealedcomparative advantage, Iran is the 65th "most complex country".[400]
Should Iran eventually gainmembership status in the WTO, among other prerequisites,copyrights will have to be enforced in the country. This will require a major overhaul. The country is hoping to attract billions of dollars' worth of foreign investment by creating a more favorable investment climate through freer trade.Free trade zones such asQeshm,Chabahar, andKish Island are expected to assist in this process. Iran allocated $20 billion in 2010 to loans for the launch of twenty trade centers in other countries.[401]
See alsoEconomic Recession in Iran
After theIranian Revolution in 1979, the United States ended itseconomic and diplomatic ties with Iran, banned Iranian oil imports and froze approximately $11 billion of its assets.[402] In 1996, theU.S. Government passed theIran and Libya Sanctions Act (ILSA) which prohibits U.S. (and non-U.S.) companies from investing and trading with Iran in amounts of more than $20 million annually.[403] Since 2000 exceptions to this restriction have been made for items includingpharmaceuticals andmedical equipment.[404]
Iran's nuclear program has been the subject of contention with the West since 2006 over suspicions of its intentions. TheUN Security Council imposed sanctions against select companies linked to the nuclear program, thus furthering the country'seconomic isolation.[405] Sanctions notably bar nuclear, missile and many military exports to Iran and target investments inoil, gas and petrochemicals, exports of refined petroleum products, as well as theIslamic Revolutionary Guard Corps,banks, insurance,financial transactions andshipping.[406]
In 2012, theEuropean Union tightened its own sanctions by joining thethree decade-old US oil embargo against Iran.[407][408] In 2015, Iran and theP5+1 reached adeal on the nuclear program that will remove the main sanctions by early 2016.[409] Even though Iran can trade in its own currency some problems subsist mainly due to the fact that it cannot transact inUS dollars freely.[410]Given its largereserves of oil andgas, theIranian rial could become aworld reserve currency if parity is established withoil and gas.[citation needed][411]
In 2018, theUnited States government unilaterally withdrew from theJCPOA agreement and re-imposed its sanctions onIran's oil sales,petrochemicals,shipping,metals trading andbanking transactions.[412]
According to U.S. Undersecretary of StateWilliam J. Burns, Iran may be losing as much as $60 billion annually in energy investment.[413] Sanctions are making imports 24% more costly on average.[414] In addition,the latest round of sanctions could cost Iran annually $50 billion in lostoil revenues.[415] Iran is increasingly usingbarter trade because its access to the international dollar payment system has been denied. According to Iranian officials, large-scale withdrawal by international companies represents an "opportunity" fordomestic companies to replace them.[416][417]
The IEA estimated that Iranian exports fell to a record of 860,000 bpd in September 2012 from 2.2 million bpd at the end of 2011. This fall led to a drop in revenues and clashes on the streets of Tehran when the local currency, therial, collapsed. September 2012 output was Iran's lowest since 1988.[418]
The economic impacts of sanctions have been severe. Based on research, the sanctions resulted in welfare losses across all income groups in Iran, with wealthier groups suffering greater losses compared to poorer groups.[419][420] Additionally, income concentration and share within top income groups declined post-sanctions.[421]
According to the U.S. Iran could reduce the worldprice of crude petroleum by 10%, saving the United States annually $76 billion (at the proximate 2008 world oil price of $100/bbl).[388]
According toNIAC, sanctions cost the United States over $175 billion in lost trade and 279,000 lost job opportunities.[422] Between 2010 and 2012, sanctions cost theE.U. states more than twice as much as the United States in terms of lost trade revenue. Germany was hit the hardest, losing between $23.1 and $73.0 billion between 2010 and 2012, with Italy and France following at $13.6-$42.8 billion and $10.9-$34.2 billion respectively.[422]
GDP growth turned negative in 2013 (−5%). The unofficial unemployment rate was 20% by mid-2012.Oil exports dropped to 1.4 million bpd in 2014 from 2.5 million bpd in 2011. By 2013, Iran had $80 billion inforeign exchange reserves frozen overseas.Automobile production declined 40% between 2011 and 2013.[423] According to the U.S. government in 2015, Iran's economy has reached a point where it is "fundamentally incapable of recovery" without a nuclear accommodation with the West.[424]
The tentative rapprochement betweenIran and the US, which began in the second half of 2013, has the potential to become a world-changing development, and unleash tremendousgeopolitical andeconomic opportunities, if it is sustained […] if Iran and the US were to achieve a diplomatic breakthrough, geopolitical tensions in theMiddle East could decline sharply, and Iran could come to be perceived as a promisingemerging market in its own right.[425]
In January 2019, PresidentHassan Rouhani blamed the US for Iran's declining economy. Following the US pullout from an international nuclear deal with Iran and re-imposed sanctions, Iran faced the toughest economic situation in 40 years.[426] According toMajlis, this has caused damages estimated between 150 and 200 billion dollars to the Iranian economy.[427]
In August 2024, an Iranian group called IRLeaks attacked Iranian banks.Politico described the attack as the "worst cyberattack" in Iranian history.[398][428] According toPolitico, the Iranian government was forced to pay millions of dollars to IRLeaks in ransom.[398] Politico reported that 20 out of about 29 Iranian credit institutions fell in the attack.[429][430][398] The Iranian supreme leader blamed Israel and the United States without mentioning the cyberattack on the banking system. Politico remarked it was plausible Israel or the US were involved because of tensions with Israel as well as the Americans having accused Iran of intervening in the American 2024 elections.[431][432] Politico also remarked that the group was made of freelance hackers and the attack was likely carried out for monetary gain.[398] TechCentral said the attack was probably carried out by freelance hackers.[433] An Iranian firm paid the hackers no less than $3 million to stop the attack and retrieve data.[398]
Iran is in the midst of asevere water crisis that threatens its agriculture, power supply, and habitability in some regions. Years of drought, climate change, and poor water management policies have led to depleting water reserves. Since the late 1990s, Iran's average rainfall has declined, and 2021–2025 marked an especially arid period – Iran has endured five consecutive years of drought as of 2025.[434] By mid-2025, authorities warned that many reservoirs were dangerously low or empty. For instance,Tehran's main reservoir, theKaraj Dam, reached its lowest level on record, reportedly only a few percent of capacity, raising alarm about water shortages in the capital.[435][436] Nationwide, Iran's Water Resources Management Company reported in 2021 that 57% of all reservoirs were completely empty, after a 47% drop in inflows compared to the previous year.[437] Over-extraction of groundwater has caused thousands of wells to dry up and land subsidence in many aquifers.[438][439]
The water crisis has had dire effects. Rivers and wetlands have shrunk.Lake Urmia, once the Middle East's largest salt lake, lost about 95% of its volume by 2022 before emergency measures to divert water were taken.[440] In farming provinces likeKhuzestan,Isfahan, andSistan-Baluchestan, irrigation shortages have devastated crops and livestock.[441] Rural livelihoods are undermined, leading to migration from villages to slums in cities.[442][443] The water scarcity has also triggered public unrest: in July 2021, massive protests erupted in Khuzestan over water shortages, where security forces cracked down, causing multiple deaths.[444] Similar protests occurred in Isfahan in 2021 by farmers demanding water for dried-upZayandeh Rud river.[445]
The government has implemented some measures, including cloud-seeding, building dams and water transfer pipelines, and negotiating with neighboring countries for shared water rights (e.g. over theHelmand River withAfghanistan).[446] In 2023–2024, PresidentEbrahim Raisi's administration inaugurated a pipeline to transfer water from the Sea ofOman to central provinces, and pursued desalination projects on the Persian Gulf.[447] However, experts criticize decades of mismanagement, such as over-damming, wasteful irrigation, and the cultivation of water-intensive crops (likerice,sugarcane) in arid areas, for aggravating the crisis.[448] The situation became so acute in summer 2025 that the government declared public holidays to conserve water and electricity during an extreme heatwave (temperatures >50 °C), urging citizens to drastically limit water use.[434] Officials have even discussed importing water from neighboring countries. PresidentMasoud Pezeshkian (in 2025) warned that the water crisis is "more serious than what is being discussed" and that without urgent action, Iran could face an unmanageable situation in the near future.[449]
Iran grappled with an electricity supply crisis in recent years, leading to frequent power outages across the country.[450][451] The power grid faces multiple strains: rising domestic demand, particularly for air conditioning in hot summers and heating in winters, reduced generation from hydropower due to drought (water shortages have cut hydroelectric output), aged infrastructure and lack of investment, and fuel supply issues (natural gas shortages in winter curtail power plants).[452][453][454] Starting around 2020, these issues converged into regular blackouts. In summer 2021, for example, many cities endured scheduled and unscheduled electricity cuts during a heatwave, sparking public anger as traffic lights failed and businesses lost refrigeration.[455][456]
One controversial factor has beencryptocurrency mining : Iran became a hub forBitcoin mining (legalized in 2019) due to cheap subsidized power, but the energy-intensive activity strained the grid. At times Iran temporarily banned crypto mining (e.g. summer 2021 and winter 2022) to free up power capacity. It was revealed that some entities, including possibly theRevolutionary Guard, operated large mining farms that consumed as much electricity as several provinces, often without proper billing – causing outrage that ordinary people suffered blackouts while illicit mining drew power.[457]
The electricity rationing has been notably inequitable. InTehran, wealthier northern neighborhoods (which include many government and military facilities) experience far fewer outages than poorer southern districts.[458] In mid-2025, data showed northern Tehran had only about 1% of the city's blackouts, while southern districts suffered over 30% of the outages.[458] This disparity, confirmed by official reports, led to public criticism and even parliamentary questions about fairness – many suspect that "sensitive" areas (where elites live or strategic sites are located) are shielded from cuts, leaving ordinary neighborhoods to bear the brunt.[458] In provinces likeKhuzestan,Busher,Hormozgan and other southern regions, summer temperatures above 45 °C combined with lengthy power outages have created life-threatening conditions and sparked protests. Politicians from those regions complained that cutting electricity for up to 6–7 hours a day in 50 °C heat is intolerable and blamed mismanagement by the Energy Ministry.[458]
The government has cited peak demand outstripping generation as the cause of the blackouts.[459][460] Iran's installed power capacity (~85 GW) is theoretically sufficient, but actual output is lower due to maintenance issues and fuel constraints.Natural gas, which fuels ~70% of power plants, saw shortages in winter 2021–2022, causing electricity cuts and even shutting industries and schools to save gas.[461] In response, officials have been pushing projects for new power plants (often withRussian orChinese assistance) and upgrading the grid. Nonetheless, the electricity crisis remains unresolved as of 2025 – with outages now a common part of daily life in summer and even winter.[461] The crisis has economic costs: small businesses lose customers and goods (e.g. melted frozen products, downed internet), factories halt production during cuts, and urban residents incur appliance damages.[462][463] Public frustration is high, viewing the persistent outages as a sign of poor governance in a country that is a major energy producer. The government's inability to ensure consistent power, critics say, undermines Iran's ambitions for industrial growth and has even led to sarcastic comparisons to the 1980s war era, when electricity was more reliable than today.[464][465]
The Iranian regime spent more that 9 billion USD onIran's nuclear program over the last three decades.[69] The efforts to develop the nuclear program were accompanied by threats todestroy Israel,[466] which resulted in heavysanctions that were imposed on Iran and consequently, heavy indirect cost. The indirect cost of the nuclear program are estimated to be 3 trillion USD.[69] Iran lost more than 450 billion USD in oil revenues,[467] more than 100 billion USD in lost of foreign investment,[468] and the Iranian Real has been devaluated in more than 95%.[469]
Much of the investment was evaporated as a result ofIran-Israel war, which resulted in a destruction of large parts of Iran's nuclear program, including the destruction of facilities like the nuclear facilities inNatanz andFordow as well as assassination of nuclear scientists.[470][471][472][473]
The 12-day war with Israel in June 2025 had aprofound short-term impact on Iran's economy and underscored its fragility. During the conflict, Israel's airstrikes targeted key Iranian infrastructure, including oil refineries, export terminals, and even nuclear sites, while Iran's Revolutionary Guard launched hundreds of missiles at Israeli targets.[474][475] The economic toll was significant: Iran's oil exports plunged by 94% during the war, dropping from about 1.7 million barrels per day to barely 100,000, due to damage and fear of tanker transit in the Persian Gulf. This translated to around $120 million in lost oil income per day, or roughly $1.4 billion total loss over 12 days.[32] Tehran also incurred heavy costs firing ballistic missiles and drones – an estimated 591 missiles were launched, which, given unit costs ranging from $250k to $8 million, could have cost up to $4–5 billion in arsenal expenditure.[32] On the other side, Israeli and U.S. strikes caused billions in physical damage: dozens of military facilities, communication centers, and at least 120 residential buildings in Tehran were destroyed or severely damaged.[476][477] Three nuclear enrichment sites were hit; while Iran claimed damage was minor, U.S. officials said one site was "completely destroyed," potentially nullifying an investment Iran valued at trillions of dollars over decades.[478][479][480]
The war's destruction compounded Iran's existing infrastructure crisis. Even before 2025, Iran estimated it needed over $500 billion in investment to modernize infrastructure (power plants, water systems, transport).[481] War damage meant reconstruction spending will divert funds from other development needs.[32] Moreover, the conflict prompted a week-long internet blackout by Iranian authorities for security, which itself caused over $400 million in economic losses (e.g. e-commerce, communications) according to NetBlocks estimates.[482] Cyberattacks also hit Iran's financial sector during the war, with one hack of a major crypto exchange (Nobitex) reportedly stealing over $100 million of assets.[483]
After 12 days, Iran agreed to a ceasefire; an Iranian MP on parliament's economic commission admitted Iran's economy "lacks the resilience for a decisive battle" and that the financial strain was a key reason Iran could not prolong the war.[484][485]
The war's aftermath brought even tighter U.S. sanctions. For example, enforcement on oil smuggling was intensified by Western navies. Global risk perception of Iran rose, deterring foreign investors further and even prompting capital flight among wealthy Iranians fearing instability.[486] The currency, which had plunged during the conflict, remained very weak (around 1.3 million rials per USD by mid-late 2025).[487]
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