Iran’s economy in 2025 is facing deep structural crises, the result of decades of mismanagement, international sanctions, systemic corruption, and widespread imbalances across various economic sectors. The rapid devaluation of the national currency, declining purchasing power, industrial stagnation, capital flight, and decreasing GDP all indicate a crisis that could lead to widespread social unrest and protests.
The Collapse of the National Currency and Market Freefall
The exchange rate of the U.S. dollar in Iran’s free market, which was around 60,000 tomans at the beginning of Masoud Pezeshkian’s government, has now surpassed 100,000 tomans. The state-run Jahan Sanat reports, “The exchange rate of the rial to the dollar in the Persian calendar year 1403 (March 2024-March 2025) reached its worst level. The severe devaluation of the rial has left people angry and confused.” This freefall in the value of the national currency has not only fueled inflation but also plunged financial markets into crisis.
The stock market has also suffered significantly, with the main index dropping by 34,000 points, leading to a mass exodus of private capital. Instead of being invested in production, liquidity is being funneled into the currency, gold, and even offshore investments, further exacerbating economic instability.
#Iran’s Clerical Regime Engulfed in Infighting Amid #Economic Collapse and Public Discontenthttps://t.co/i19E18Q8x6
— NCRI-FAC (@iran_policy) January 7, 2025
Industrial Decline and Widespread Factory Closures
A survey by Donyaye Eghtesad 62 economic researchers warns that “economic mismanagement, coupled with restrictive policies, has left Iran on a path toward deindustrialization.” The report highlights that “factors such as instability in economic policies, government intervention in markets, and failure to create a competitive business environment have severely weakened the country’s industrial base.” Experts predict that if these fundamental structural issues remain unaddressed, Iran will face widespread factory closures and mounting unemployment.
State-affiliated economist Masoud Nili further warns that “deep structural imbalances in Iran’s economy extend beyond the budget and banking sectors to energy, environmental, and pension fund crises.” This underscores that Iran’s economic crisis is not just about inflation and recession but affects every aspect of the country’s economic framework.
According to the Iranian Parliament’s Research Center, inflation in 2025 is projected to remain above 35% in the most optimistic scenario, while more pessimistic forecasts warn it could surpass 50%, exacerbating an already dire economic situation. Reports indicate that persistent inflationary pressures are rapidly eroding household purchasing power, leading to declining consumer demand and placing domestic industries on the brink of collapse. The diminishing purchasing power of households has led to a stagnation in consumer markets, pushing domestic industries to the brink of collapse. Asr-e-Iran reports, “The continued erosion of the middle class’s purchasing power due to persistently high inflation has expanded poverty and maintained income inequality at alarming levels.”
#Iran News:
State Media Warns of Stark Economic Choices — Surrender or Collapsehttps://t.co/1mL8hVnsUD— NCRI-FAC (@iran_policy) October 25, 2024
Growing Public Discontent and the Threat of Mass Protests
With economic pressures mounting, social dissatisfaction is also reaching a boiling point. The government’s failed policies and ongoing repression have only exacerbated tensions. Khabar Online, quoting Masoud Nili, states, “The biggest issue, in my view, is the deepening social divide—between generations, social classes, and genders—all of which reflect a severe lack of public trust.”
In addition to economic struggles, public distrust in the government has soared. Jahan Sanat, a newspaper affiliated with the so-called reformist faction—which often presents itself as an opposition force while remaining within the system—blamed rival factions, writing on March 18: “In 1403, hardliners further restricted the normalization of relations between the people and state institutions. This has led to a significant erosion of trust in the government.” This growing mistrust, coupled with worsening living conditions, could pave the way for widespread anti-government protests.
3) Farshad Mo’meni, state-affiliated economist: "#Iran is a country facing numerous crises, and these crises in the economic realm have exceeded conventional bounds. If other crises in its cultural, social, political, and international spheres are not greater than its #economic… pic.twitter.com/brxxS6SEkW
— NCRI-FAC (@iran_policy) March 29, 2024
Is Iran Headed Toward Economic Collapse?
Iran enters 2025 with a crippled economy, low growth, soaring inflation, a declining industrial sector, and escalating social discontent. Misguided domestic policies and external pressures have pushed the country toward a comprehensive crisis.
While the government’s development plans aimed for an 8% economic growth rate, the reality suggests that Iran is struggling even to maintain its current fragile state. The freefall of the national currency, mass factory shutdowns, rising unemployment, dwindling investments, and uncontrolled inflation are clear indicators of an economy on the verge of collapse.
The Iranian regime’s misplaced priorities, unwillingness to enact real economic changes, and pervasive corruption are driving the country toward an inevitable catastrophe. Economic collapse and deepening social unrest are no longer distant threats but imminent realities. With living conditions deteriorating and trust in the state eroding, a new wave of large-scale uprisings appears unavoidable.