As of January 2026, Iran is experiencing its deepest and longest economic crisis in modern history. With international sanctions, particularly those reimposed under current United States president Donald Trump, Iran's oil exports and access to the global market have been severely limited. Domestic mismanagement, rampant corruption, geopolitical instability, and structural inefficiencies have all led to acute social discontent. Due to the crisis, inflation skyrocketed to over 48.6% in October 2025 and 42.2% in December 2025, severely impacting household budgets. [1] Between 27% and 50% of Iranians are currently living under the poverty line—a stark increase from 2022. [2] A systemic energy crisis has consistently plagued the country for years, with the issue reaching a climax alongside the rapid economic decline. [3]
The ministry of social welfare announced in 2024 that 57% of Iranians are having some level of malnourishment. Majlis reported that 50% of males 25 to 40 are unemployed and not looking for employment. [4] [5]
The dual crises have resulted in severe food shortages and triggered nationwide protests in Iran in 2025, along with labor strikes in the mass transportation sector. [6] Later in 2025, even greater protests erupted over the dire economic situation, and also included many anti-regime sentiments and chants. [7] [8]
As of December 10th, 2025, Time magazine, Euronews and Al-Monitor reported that Iran was nearing collapse. [5] [9] The Rial has dropped to its lowest value ever, trading at 1,250,000 Rials to one US dollar, with the Minister of Finance blaming the war's impact. [10] [11] Iranian Supreme Leader Ali Khamenei ordered people to reduce consumption of food, water, energy and fuel. [12]
The budgetary commission has reported that the government's budget deficit was estimated to be around 1,800 trillion tomans. [13] Meat has reportedly become a luxury food item, whereas 7 million Iranians are hungry. [14] [15]
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.[ citation needed ] For decades, Iran has been subject to criticism based on its nuclear program, 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. [16] [17] The 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. [18]
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. 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. This economic corruption hinders public trust and investor confidence alike, despite government attempts to downplay the issue. For instance, Iranian Supreme Leader Ali Khamenei has stated that although there “are cases of corruption; it is not systematic” in Iran. [19] In 2013, a Reuters special investigation found that Khamenei himself controls a massive financial empire built on property seizures worth $95 billion. [20]
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 modernization. Poor maintenance and aging equipment lead to frequent breakdowns and inefficiencies. [21] Subsidies on energy prices have historically appeased the public, but have resulted in increased waste and made policymakers reluctant to increase prices to stabilize the sector. [22] 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. [23]
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. [24] [25]
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. [26] 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. [27]
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 stabilization 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 per cent of Hezbollah salaries, Barrack said. [28]
Amidst the broader Middle Eastern crisis, historical tensions with Israel erupted into open warfare after Israel struck Iranian military and nuclear sites. [29] [30] This jumpstarted a series of back and forth strikes between Israel and Iran and its allied forces in the region. [31] [32]
On 27 December 2024 the central bank blocked bank accounts and payment terminals of all internet cryptocurrency to money exchange platforms. [33]
In January 2025 several corporations pulled out of Iran, for example Iran Hyper Star. [34] the Majlis launched a failed vote of impeachment against the minister of oil and the minister of economy. [35] The Iranian president reported 175000 billion toman in losses within 9 months in the private sector due to poor economic conditions. [36] Authorities have warned of famines which could soon affect the country. [37]
Retirees, merchants and workers protested starting in 2016 in 20 out of 30 cities including Ardebil, Yazd Hamedan, Kermanshah, Kurdistan, West Azerbaijan, Esfahan, Tehran, Ahvaz, Hamedan and Shush, 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 criticized 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." [38] [39] [40] [41] [42] [43] [44] [45] Former Prince Reza Pahlavi blamed government incompetence for prices rising. [46]
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. [47] [48] [49] [50]
Around January 2025, meat and seed cooking oil became largely unaffordable by most Iranians as the Iranian Rial was rocked by significant inflation. [51] [52] [53] [54]
On 11 February 2025 a massive blackout affected Tehran as well as several major cities. [55] The Social Security Organization in Iran raised medicine prices of 400 drugs by more than two times. [56]
The Iranian Minister of economy 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. The President of Iran has similarly been pressured to step down. [57] [58]
On 19 March 2025 the exchange rate passed US$1 to 1,000,000 rial, making it the most worthless currency in the world. [59]
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. [60] [61]
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 regime of impending revolution by poor people. [62] On April 6, 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. [63]
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 freedom and, in some cases, the overthrow of the regime. Protesters chanted anti-government slogans such as "Death to the Dictator". [7] [8]
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