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Iran’s economy is facing severe challenges as signs of isolation, recession, and mismanagement become increasingly apparent. Reports indicate that the country’s share of global trade has plummeted, critical industries are in crisis, and state-controlled entities dominate economic resources.
The state-run newspaper Shargh acknowledged that “Iran’s economy has effectively exited the global economic cycle,” stating, “Iran’s share of global trade, which was once 2.2 percent, has now fallen to 0.02 percent, signifying international isolation.” The report highlighted that foreign investment has declined sharply, and Iran’s economy is increasingly marginalized on the world stage.
Collapse of the Oil Industry
Iran’s oil sector, a key source of revenue, is facing a crisis due to sanctions and mismanagement. Shargh reported, “The country’s oil industry requires an annual investment of $200 billion just to maintain current production levels. However, under sanctions, such investment is impossible in oil, gas, or other industries.” The deterioration of infrastructure and lack of funding for modernization have placed the future of Iran’s energy sector in jeopardy.
Watch and judge if #Iran is pacing towards #economic collapse pic.twitter.com/cfzvyb4i1C
— NCRI-FAC (@iran_policy) March 23, 2023
Severe Budget Deficit in Social Security Organization
The financial crisis has extended to the Social Security Organization, which faces a historic budget shortfall. Ali Babaee Karnami, head of the Social Commission in the regime’s parliament, stated, “By the end of the year, the Social Security Organization must secure 212 trillion tomans to cover expenses, including healthcare, pension increases, and salaries for the last two months.” He added that the organization “will only be able to generate 115 trillion tomans through insurance premiums and employee contributions, leaving a 50 percent budget deficit.” This raises serious concerns about the government’s ability to meet pension and healthcare obligations.
Rising Informal Settlements and Rural Crisis
As economic conditions worsen, social challenges are escalating. Mousalreza Hajibeglou, the head of the Supreme Council of Provinces warned, “The number of people living in informal settlements around major cities is increasing, requiring urgent action.” Rural communities are also experiencing hardship, with severe challenges in the agriculture and livestock sectors. Iran’s Ministry of Agriculture has yet to implement effective measures, prompting the parliament to summon the agriculture minister for explanations.
Economic Control by Military and Religious Institutions
Mahmoud Jamsaz, a state-affiliated economist, criticized the economic dominance of state-affiliated entities, revealing that “60 percent of Iran’s national wealth is controlled by four institutions tied to the Supreme Leader and the IRGC.” These include:
- Execution of Imam Khomeini’s Order (Setad Ejraiye Farmane Hazrate Emam)
- Foundation of the Oppressed (Bonyad Mostazafan)
- Astan Quds Razavi
- Khatam al-Anbia Construction Headquarters
#Iran’s Clerical Regime Engulfed in Infighting Amid #Economic Collapse and Public Discontenthttps://t.co/i19E18Q8x6
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Jamsaz questioned, “Thousands of billions of tomans circulate in these institutions. Do they pay taxes? Do they contribute to the government budget? How much do they distort economic balance?” He further criticized their financial power, stating, “You control oil revenues, small businesses, and national resources. How do you allocate these assets? Under what system do you operate?”
Energy Crisis and Industrial Disruptions
Iran’s ongoing energy crisis is further crippling its industrial sector. Mojtaba Razavi, head of the House of Industry and Mines in Mazandaran, stated on January 12, “We have reached the breaking point. We have no electricity in summer or winter.” Ali-Mohammad Abouei, chairman of the Rolling Steel Association, added, “I have no good news for the steel industry. Reports indicate that authorities have ordered a complete shutdown of electricity to industries.”
Amir Aliqolizadeh, Director General of the Ministry of Industry, Mining, and Trade’s Mineral Industries Office, warned, “A very difficult summer lies ahead. Power shortages next year are expected to reach 20,000 megawatts, but in my view, we should anticipate over 24,000 megawatts of deficit.” Eghtesad Online confirmed these concerns, noting that energy shortages will lead to further declines in production and economic instability.
Government Financial Crisis and Record Budget Deficit
Government financial mismanagement has resulted in a record budget deficit. Mohammad Taghi Fiazi, another state-affiliated economist, stated, “Excluding the deficit from targeted subsidies, a budget shortfall of 920 trillion tomans has been recorded, which is unprecedented.” He explained, “As inflation remains between 40 to 50 percent and oil revenues decline due to sanctions, the budget deficit worsens each year.”
Regime’s Fear Mounts as #Iranian Officials Warn of Economic Collapse and Public Outragehttps://t.co/eYd3ctUroe
— NCRI-FAC (@iran_policy) November 24, 2024
Fiazi further noted that the Iranian government is preparing public sentiment for subsidy reductions, stating, “The government’s announcement of this budget deficit is aimed at justifying subsidy cuts and economic austerity measures while maintaining spending on security forces, regional interventions, and state-controlled organizations.”
Despite this financial crisis, the clerical regime continues to support its proxy forces in the Middle East with suitcases full of cash.
The combination of economic mismanagement, international sanctions, and military-controlled wealth has left Iran’s economy in a dire state. Reports from Iranian state media and economic experts highlight a country facing severe financial instability, declining trade, and worsening social conditions. As Mahmoud Jamsaz warned, “The government is so preoccupied with foreign interventions that it ignores the risk of economic collapse. The threat of economic downfall is real and could lead to worsening crises.”