Iran's economy shrank by an unprecedented 10 percent in Spring 2026. This statistic, published by the Statistical Center of Iran, reflects the deep impacts of war and economic sanctions on the country. Despite the central role of war and sanctions in this crisis, experts believe that structural problems and chronic inefficiencies of the Islamic Republic are the main causes of this situation.
Negative Growth Including and Excluding Oil
Statistics show that the country's economic growth in the first quarter of 2026 reached negative 10.1 percent when including oil, and even when excluding oil, the economic growth decreased to negative 4.6 percent. This is while for years, foreign currency income from crude oil sales was considered the main source of funding for the Islamic Republic's treasury. Recent statistics indicate that oil can no longer guarantee this funding.
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Collapse of Various Economic Sectors
Details of economic growth statistics indicate a severe decline in various sectors. The oil and gas, industry and mining, and services sectors have all faced negative growth. In this context, only the agricultural sector has performed positively. Albert Baghzian, an economist, points out that oil used to act as a cover for economic growth figures, but now it lacks the ability to cover the decline in other sectors.
Baghzian mentions the factors influencing this situation and states: "The increase in exchange rates, sanctions, reduced investment, and increased production and currency transfer costs have all affected production conditions and the economy." These factors, alongside the war and economic pressures from the United States, have contributed to exacerbating the current crisis.
Farshad Momeni, an economist, also emphasizes that incorrect economic policies are the main cause of the crisis and says: "Over the past four decades, policies have repeatedly failed, yet the same policies are repeated with the argument that they should be tested once again." He also suggests that the first step to solving these issues is to stop the destructive policies whose adverse results have been observed multiple times.
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