Two-minute read
Iran’s economy, already in deep crisis after years of mismanagement, corruption, and external pressures, faces an even bleaker future under the new administration of Massoud Pezeshkian. Despite the regime’s rhetoric, the country’s economic reality is one of stagnation and decline. With Pezeshkian at the helm, lacking both a clear economic plan and a competent team, the outlook remains dire.
Massoud Pezeshkian inherits an economy on the brink of collapse. Under his predecessor, Ebrahim Raisi, Iran’s economic performance plummeted, leaving a legacy of high inflation, rampant poverty, and a depreciating currency. Now, Pezeshkian faces the enormous challenge of reversing this trend without any concrete strategy or experienced leadership in his cabinet.
Pezeshkian’s proposed Minister of Economy, Abdol-Nasser Hemmati, is emblematic of this lack of direction. Hemmati, during his previous tenure as head of the Central Bank, oversaw a period of economic deterioration marked by soaring inflation and a dramatic devaluation of the rial. The disastrous implementation of the dual exchange rate system under Hemmati’s watch not only depleted national reserves but also fueled corruption and widened economic disparities.
#Iran’s Economic Woes Expose Raisi’s Failed Promiseshttps://t.co/cSA5Ji3AUS
— NCRI-FAC (@iran_policy) April 15, 2024
Other key appointments in Pezeshkian’s cabinet, such as the ministers responsible for industry, trade, and finance, also lack clear economic strategies. Reports suggest that these ministers are still uncertain about the policies they must present to parliament, a troubling sign of the regime’s inability to address the country’s economic challenges effectively.
Iran’s industrial sector, once a cornerstone of the economy, is now mired in recession. According to official statistics, the Purchasing Managers’ Index (PMI) for the sector has shown contraction for two consecutive months, signaling deepening industrial stagnation. Issues such as frequent power outages, shortages of capital, and an exodus of skilled workers have exacerbated the situation. The latest (official) figures indicate that industrial activity has fallen to a PMI of 47.2, well below the 50-point threshold that separates expansion from contraction.
The labor market is similarly distressed, with the employment index falling to 48.5, marking the steepest decline in three years. This drop in employment reflects both the lack of opportunities and the growing disillusionment among workers, many of whom are leaving the sector due to uncompetitive wages and rising living costs.
Delving into #Iran’s Corruption Chronicles – Part 3https://t.co/Vb50Xx9eVg
— NCRI-FAC (@iran_policy) December 22, 2023
Pezeshkian has pinned some of his hopes on the Seventh Development Plan, which calls for ambitious economic goals, including placing Iran among the top 10 global economies and achieving a GDP of $2 trillion. However, with only 20 months left to implement this plan, none of these targets have been met. The country’s GDP remains at approximately $450 billion, inflation is stuck at 40%, and a third of the population continues to live in absolute poverty. The plan’s objectives are increasingly seen as unattainable under the current administration.
The Tehran Stock Exchange has become a mirror of the regime’s failure. Recent weeks have seen over 3,600 billion tomans withdrawn from the market by increasingly skeptical investors. The stock market index has dropped to its lowest levels in two years, reflecting the deepening crisis and the regime’s inability to restore investor confidence.
As Iran’s economic situation deteriorates, the social fabric of the country continues to fray. Persistent protests across various sectors—workers, teachers, and even retired government employees—underscore the growing discontent. The inability of Pezeshkian’s administration to address these economic grievances suggests that the situation is unlikely to improve. Instead, the country is on a path toward greater social unrest, fueled by an economy that shows no signs of recovery. Only a fundamental political and economic overhaul can alter this trajectory, but under the current regime, such change remains a distant hope.