Iranian economic crisis
Economic downturn in Iran from 2024 onwards
From Wikipedia, the free encyclopedia
As of January 2026, Iran has been experiencing a serious economic crisis. With a combination of international sanctions and a United States naval blockade in 2026, Iran's oil exports and access to the global market have been substantially restricted.[3]
_-_Iran,_Islamic_Rep.png)
Domestic mismanagement, rampant corruption, geopolitical instability, and structural inefficiencies have all led to acute social discontent. As a result of the crisis, inflation rates skyrocketed to over 48.6% in October 2025 and 42.2% in December 2025, severely impacting household budgets.[4] As of March 2025, Iranian news outlets have estimated that anywhere from 22% to 50% of Iranians are currently living under the poverty line — a stark increase from 2022.[5] A systemic energy crisis has consistently plagued the country for years, with the issue reaching a climax alongside the rapid economic decline.[6]
In 2024, the Ministry of Cooperatives, Labour, and Social Welfare announced that 57% of Iranians were experiencing some level of malnourishment. Majlis reported that 50% of males between ages 25 and 40 are unemployed and not actively seeking employment.[7][8]
The dual crises have resulted in severe food shortages and triggered nationwide protests in Iran in May 2025, along with labour strikes in the mass transportation sector.[9] In late 2025, larger-scale, anti-regime protests erupted over the dire economic situation.[10][11]
As of December 2025, Time magazine, Euronews, and Al-Monitor reported that Iran was nearing economic collapse.[8][12] The rial had dropped to its lowest value ever, trading at 1,750,000 rials to one US dollar, with the Minister of Finance blaming the impact of the Twelve-Day War.[13][14] Iranian Supreme Leader Ali Khamenei ordered people to reduce consumption of food, water, energy and fuel.[15] The budgetary commission also reported that the government's budget deficit was estimated to be around 1,800 trillion tomans.[16] Meat had reportedly become a luxury food item, whereas 7 million Iranians have gone hungry.[17][18]
In April 2026, reports emerged that the rial experienced a 15% drop in two days, bringing the rate to anywhere between 1,760,000 and 1,810,000 rials to the U.S. dollar. Additionally, the Central Bank of Iran reported a 65.8% year-on-year inflation rate.
By May 2026, the situation became so dire that certain products began experiencing up to 100% price increases in just one week.[19][20][21] Many workers found themselves unable to afford simple foodstuffs, such as bread. Female workers were especially impacted.[22] Donya-e-Eqtesad reported that "National Credit Network ration coupons are too low".[23] Further, individuals have been increasingly sharing homes as the housing crisis has deepened. Others are struggling to afford medicine as prescription drug prices continue skyrocketing.[24][25][26]
Deepening poverty is driving more Iranian and Afghan migrant children into labor, leaving them exposed to exploitation, violence, and malnutrition, in criminal networks.[27]
In June 8 largest government banks were taken out for 3+ weeks.[28] President Dr Pezeshkian received death threat. Coupon ration for those 8-10 grade of families earning 30/54 million toman income was removed.[29][30] Pensioners held protests in various cities.[31]
In July 14 it was reported two out of every three Iranians is jobless,[32] only a mere 37% percent of Iranian working-age workforce have jobs, about 66 million are of working age. Around 24 million have jobs .[33]Due to high medicine costs people turned to AI self diagnosis healthcare.[34] An Iran Wire survey reported depression in 48% and fear and anxiety in about 45%.[35]
In August 2026 Supreme Leader Mojtaba Khamenei warned Dr President Pezeshkian that he would be removed and his resignation would be accepted.[36]
Government increased gas prices two fold up to 10000 toman from 5000 toman for 1 liter.[37] increased guaranteed global rent rate hike 25%, increased internet prices thrice and with severe internet usage penalty as opposed to national interanet, increased electricity prices 2 fold and prices of groceries increased several times more than 66%-%112. Prices of minerals was increased 58.6%.[38][39][40][41][42][43][44][45][46] Iranian regime was unable to pay military and police salaries and Pezeshkian drew 20 million barrels of oil for paying IRGC AF.[47][48] Government was unable to pay food stamps.[49]Pezeshkian First VP , Vice President Aref ordered ministers to avoid bringing government problems to public attention otherwise they would be removed.[50]
Iran reported highest ever misery 91% index.[51]
Water and electricity bills surged fourfold.[52] In Tehran rents hit three times workers' monthly pay checks.[53] Health commission warned the year 1406 would be the year of massacre en masse of patients due to medicine subsidies being unpaid for by social security insurance due to surge in prices[54].[55]
Subsidy
In 2026 Iranian regime allocated billions of dollars for Iraq pilgrimage.[56]
Housing crisis
In July 2026 Iranian regime formed National Housing Committee. It froze and capped rents increase at 25% allowing people to file complaint on landlord. Post-war home prices massively rose to 50 % share of household income. Minister of Housing added more loans to half finished projects.[57][58][59][60][61]
Blockade
On July 14 US military reimposed naval blockade on Iran ports and marine ships, regime officials admitted the blockade was having devastating impact on the country.[62] Tehran Stock Exchange was continually crushed.[63]
Prices of goods and basic necessity product increased 400% to nearly 30,000,000mn rial. Prices of eggs rose three folds from 70,000 to 200,000 an egg shell.[64][65][66]
Prices of addiction treatment medicines rose 30% and many treatment clinic centers shutdown because of it.The country was also reporting a rise of weed cannabis use among females.[67][68]The number of poppy fields rose 246% to more than 32,000 hectares, on some provinces it replaced rice farmlands.[69][70][71] An IranWire leaked presidential report recorded Iran's national anger rate at 63.6%, described as the highest ever measured by comparison with Gallup's global emotions index, whose previous high was 47% (Chad). [72]
2026 global banking crash
Bank Noor and Ayandeh Bank collapsed and was merged into Bank Melli Iran.[73]
2026 blackouts
Post-wars
In 2025 Iranian regime began blocking and limiting accounts of indivual to maximum 10 bank accounts.[77]
In 2026 CBI removed the interest rates caps combat inflation.[78]
Lists of names from customers of Bank pasargad who received 1000 billion toman loans was posted.[79]
Iranian government was unable to pay salaries of its militaries.[80]
Ministry of Economic National financial Information center reported mass amount of Iranian currency secretly moved to Iraq, Pakistan, Afghanistan.[81][82]
During the blockade Iranian regime traded gas for rice with Pakistan and also paid in Yuan.[83]
The government begun trading oil for imported electricity with Turkey.[84]
The Secretary of the National Population Fund has announced 8.8% nationwide decline in marriages in 2026. The Statistical Centre recently announced the misery index in Kurdistan reached whopping 96/3%. Second child was reduced 11%.[85][86][87]
State Welfare Organization (Behzisti) stopped disability payments.[88][89]
In 2026 Iran recorded lowest birth rate in 66-70 year historic lowest record.[90]
Relief aid
Iranian regime imported humanitarian food aid and other cargo from more than 7 countries including Russia, Azerbaijan, Turkmenistan, Turkey, India, China, as well as by organizations such as Médecins Sans Frontières and the World Food Programme. For further relieve Iranians hunger issue in Iran , US grain and corn and soy and wheat as well as medicine was approved by President Trump to be exported to Iran to be paid for via unfrozen assets.[91][92][93]Iran Jihad Agriculture Minister asked US for more agriculture deals to import food.[94]
Statistics organization reported the annual inflation to be +%88.6/%200 highest global record in 50 years[95][96]
Background
Oil dependence and sanctions
Since the Iranian Revolution, Iran has been heavily dependent on oil revenues to supply the government's annual budget, making it very vulnerable to market prices and particularly international pressure. In the fiscal year of 2009, 60% of the government's budget came from its large oil and gas sector.[97] For decades, Iran has been subject to criticism based on its nuclear programme, sponsorship of terrorism, and human rights record, resulting in strict sanctions which restricted Iran's access to finance and technology and negatively affected its economy.[98][99] The 2015 Joint Comprehensive Plan of Action nuclear deal marked a significant turning point in international relations and led to the lifting of many nuclear-related sanctions, which led to a rebound in the economy of Iran and renewed its access to global markets. When the United States unilaterally withdrew from the deal, the economy of Iran was once again in jeopardy. The move crippled Iran's oil exports and once again isolated it from the global financial system and is arguably the main cause of the country's current crisis.[100] To mitigate the crisis, the government stopped using the SWIFT system in lieu of alternative financial platforms and barter agreements with allies (especially China & Russia).
Economic mismanagement
Iran is a mixed and centrally planned economy. Due to persistent corruption, the role of the government in the economy acts as more of a limiting factor to development, imposing burdensome regulations against public companies.[citation needed] Additionally, government-controlled corporations may easily crowd out the weak public sector and benefit from preferential access to resources and contracts, but often operate less efficiently compared to their public counterparts.[citation needed] This economic corruption hinders public trust and investor confidence alike, despite government attempts to downplay the issue.[citation needed] For instance, former Iranian Supreme Leader Ali Khamenei has stated that although there "are cases of corruption; it is not systematic" in Iran.[101] In 2013, a Reuters special investigation found that Khamenei himself controls a massive financial empire built on property seizures worth $95 billion.[102]
Energy crisis
One of the foremost symptoms of mismanagement in Iran manifests through its power grid. Many of Iran's power plants, refineries, and energy distribution networks were built decades ago and have not received necessary investment or modernisation. Poor maintenance and ageing equipment lead to frequent breakdowns and inefficiencies.[103] Subsidies on energy prices have historically appeased the public, but have resulted in increased waste and made policymakers reluctant to increase prices to stabilise the sector.[104] Corruption is also a factor in the crisis; the Islamic Revolutionary Guard controls the energy sector, and a significant proportion of the oil is smuggled abroad and funds intended for the sector are siphoned by the guard.[105]
Despite the ongoing power shortages, Iran continues to export an increasing amount of gas and especially electricity, with a surge of nearly 92% in the first four months of 2023 compared to the same period in 2022.[106][107]
The hostile nature of the energy sector has led to an environment in which half of Iran's industry has halted due to rolling blackouts. This has resulted in an exodus of international corporations and investment, and implemented a harsh bottleneck on the production capability of the companies that have managed to remain.[108] Since February 2025, power goes out nationwide for 3 to 4 hours every day due to the crisis, and anti-government protests have erupted across the country.[109]
Iran's foreign military involvement
Foreign military spending by Iran has been a source of domestic contention, as resources allocated to regional interventions compete with social welfare, infrastructure development, and economic stabilisation at home. Periods of economic hardship, marked by inflation, currency depreciation, and unemployment, have intensified public criticism of expenditures perceived as benefiting foreign allies rather than the domestic population. For instance, the Islamic Revolutionary Guard Corps (IRGC) has transferred more than $1 billion to Hezbollah in Lebanon during the first 10 months of 2025, according to recent U.S. Treasury Department disclosures. Hezbollah employs approximately 40,000 full-time personnel, according to Tom Barrack, the U.S. Special Envoy in Turkey. Each receives up to $2,200 monthly in salary. By comparison, Lebanon's official army has 60,000 soldiers who earn approximately $275 per month — just 12% of Hezbollah salaries, Barrack said.[110]
Twelve-Day War
Amidst the broader Middle Eastern crisis, historical tensions with Israel erupted into open warfare in 2025 after Israel struck Iranian civilians, military and nuclear sites before a declaration of war was made.[111][112] This jump-started a series of back and forth strikes between Israel and Iran and its allied forces in the region.[113][114]
Timeline
On 27 December 2024, the Central Bank blocked bank accounts and payment terminals of all internet cryptocurrency to money exchange platforms.[115]
In January 2025 several corporations pulled out of Iran, for example Iran Hyper Star.[116] The Majlis launched a failed vote of impeachment against the Minister of Petroleum and the Minister of Economic Affairs and Finances .[117] The Iranian president reported 175,000 billion toman in losses within 9 months in the private sector due to poor economic conditions.[118] Authorities have warned of famines which could soon affect the country.[119]
Retirees, merchants and workers protested starting in 2016 in 20 out of 30 cities including Ardebil, Yazd, Hamedan, Kermanshah, Isfahan, Tehran, Ahvaz, and Shush, as well as in Kurdistan, West Azerbaijan, displaying banners with slogans such as "Healthcare and livelihood are our absolute rights" and "Our income is in rials; expenses are in dollars." They also criticised the government's priorities, chanting, "Warmongering is enough; our tables are empty" and "Our enemy is right here; they lie and say it's the U.S."[120][121][122][123][124][125][126][127] Crown Prince Reza Pahlavi blamed government incompetence for prices rising.[128]
According to government data more than 50,000 students migrated out of the country per year. There were 950,000 school dropouts in 2024. Around 3,000 female nurses were moving out of the country per year.[129][130][131][132]
Around January 2025, meat and seed cooking oil became largely unaffordable by most Iranians as the Iranian Rial was rocked by significant inflation.[133][134][135][136]
On 11 February 2025, a massive blackout affected Tehran as well as several major cities.[137] The Social Security Organisation in Iran raised medicine prices of 400 drugs by more than two times.[138]
The Iranian Minister of Economic Affairs and Finances was impeached on 1 March 2025, just a few days after the Vice President of Iran, Mohammad Javad Zarif stepped down after pressure from the public. Similarly, the President of Iran has been pressured to step down.[139][140]
On 19 March 2025, the exchange rate passed US$1 to 1,000,000 rial, making it the least valuable currency in the world.[141]
On 14 January 2026, The Iranian rial's value has plummeted dramatically, falling from approximately 42,000 to over 1.1 million against the US dollar, rendering purchasing power almost non-existent when buying goods from outside the country.[142]
Impact
The sanctions have led to a significant decline in foreign investment, exacerbating the economic crisis. This was worsened further by increased American pressure against Iran.[143][144]
Since the beginning of the crisis, there have been significant worries by the leadership of Iran that the people may revolt. In November 2024, The Islamic Republic newspaper warned the Iranian government of impending revolution by poor people.[145] On 6 April 2025, Masoud Nili, a senior economist and advisor to former president Hassan Rouhani, described the Iranian economy as fundamentally broken from decades of corruption, lack of productivity, and over-reliance on oil exports.[146]
2025–2026 protests
In late 2025, mass protests erupted across Iran, driven by public anger over the deepening economic crisis. Initially led by bazaar merchants and shopkeepers in Tehran, the demonstrations quickly spread to universities and major cities such as Isfahan, Shiraz, and Mashhad, becoming the largest unrest since the 2022 Mahsa Amini protests. Security forces responded with measures such as tear gas. Over time, the movement expanded beyond economic demands to include calls for political freedom and, in some cases, the overthrow of the Islamic Republic. Protesters chanted anti-government slogans such as "Death to the Dictator".[10][11] The government's subsequent crackdown on the protests led to fatalities, leading to a death toll estimated at between 3,117 (per Iranian government)[147] to upwards of 36,500 (per Iran International)[148][149][150] making them some of the largest massacres in modern Iranian history.[151]
Following the protests, massacres, and 2026 Internet blackout in Iran, the uncertain situation has strained the economy further, with reports emerging of a mass closure of coffee shops and further deterioration of the economy.[152]