Economic and Political Overview

flag Iran Iran: Economic and Political Overview

In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline | COVID-19 Country Response

 

Economic Indicators

Iran's economy is characterized by its reliance on hydrocarbon resources, a vibrant agricultural sector, and a diverse service industry. Additionally, the manufacturing and financial services sectors notably feature significant state involvement. External shocks, such as sanctions and commodity price fluctuations, led to a decade-long stagnation that concluded in 2019/20. However, in recent years, Iran's economy has begun to recover, buoyed by a resurgence in services after the pandemic, heightened activity in the oil sector, and adaptive policy measures. Economic resilience has been demonstrated in response to sanctions, including exchange rate adjustments that enhanced the competitiveness of domestically produced goods in international markets. According to IMF projections, Iran’s GDP grew 5.4% in 2023 thanks to a higher-than-expected increase in the country’s oil production. For 2024 and 2025, the IMF forecasts growth at 2.5% and 2%, respectively.

The decline in revenues as a result of US sanctions has prompted the government of Iran to satisfy its financing needs through extensive debt issuance and the sale of assets on the stock market. Elevated oil prices, driven by a global demand rebound and the Ukraine conflict, have boosted oil export revenues. However, the surge in commodity prices, particularly for food items, has substantially raised the import bill. This escalation added strain to government finances, especially considering that direct food price subsidies amounted to 5% of GDP even before the recent price surge. The current account balance is expected to sustain a surplus in the forecast period, bolstered by increased oil prices and non-oil exports. However, the surplus may be constrained by a more expensive import bill resulting from higher import prices. Despite the gradual rise in oil exports positively impacting the fiscal balance, the budget deficit is anticipated to persist above pre-sanctions levels, according to the World Bank. Meanwhile, public debt declined to 30.6% of GDP in 2023 (from 34.1% one year earlier) and is expected to follow a downward trend. Inflation stood above 45% in 2023 but should gradually decline amid lower food prices, resulting in a slight acceleration in household consumption.

Iran's unemployment rate reached 9.4% in 2023. The IMF estimates that the rate will remain relatively stable in 2024 (9.6%) and in 2025 (9.8%). The number of people no longer actively seeking work is increasing. Years of recession and high inflation have severely challenged household livelihoods and halted the poverty reduction trend. According to official figures released by the Interior Ministry, around 60% of Iranians live below the relative poverty line. According to a report published by ILNA in February 2023, one-third of the country’s population is now living in extreme poverty, after the number almost doubled in one year from 2020 to 2021. The country’s GDP per capita (PPP) was estimated at USD 18,261 in 2022 by the World Bank.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 346.48366.44386.22401.19416.55
GDP (Constant Prices, Annual % Change) 3.83.02.52.02.0
GDP per Capita (USD) 4,0434,2344,4184,5444,671
General Government Gross Debt (in % of GDP) 34.130.630.532.233.8
Inflation Rate (%) n/a47.032.525.025.0
Unemployment Rate (% of the Labour Force) 9.39.49.69.89.8
Current Account (billions USD) 14.4312.5914.1613.1412.08
Current Account (in % of GDP) 4.23.43.73.32.9

Source: IMF – World Economic Outlook Database , Latest available data

Note: (e) Estimated Data

Main Sectors of Industry

Iran has a labor force of 28.6 million out of its 87.9 million population. Agriculture contributes 12.8% of the GDP, employing 15% of the active population (World Bank, latest data available). Only 9.7% of the land is arable and despite its importance to the economy and food security, the sector faces challenges such as water scarcity and limited access to modern technologies, impacting productivity and efficiency. The main crops are pistachios (world's largest producer), wheat, rice, oranges, tea, and cotton. In 2023, Iran's wheat production surged by 6%, elevating the Islamic Republic to the 14th position among global wheat producers, as per the United States Department of Agriculture (USDA), with Iranian farmers achieving a production of 14 million tons of wheat during the 2023 crop year.

The industrial sector employs 34% of the workforce and contributes 39.9% of the GDP (World Bank). Iran's industry is spearheaded by the hydrocarbon industry as the country is rich in mineral resources, mainly oil (3rd largest proved crude oil reserves in the world) and gas (2nd place in reserves in the world), copper, lead, zinc, etc. In 2023, Iran's daily oil production reached 2.99 million barrels, marking an increase of 440,000 barrels compared to 2022, as reported by the International Energy Agency, while exports reached a five-year high. The textile industry is the second most important after the oil sector. Other major industries include sugar refining, food-processing, petrochemicals, cement, and construction. Traditional handicrafts, such as carpet weaving and ceramics manufacturing, silk, and jewelry are also vital to the economy. The manufacturing sector as a whole is estimated to account for one-fifth of GDP.

The services sector contributes to 45% of the GDP and employs 51% of the workforce (World Bank). The expansion of urban areas has fostered the growth of the service sector. Significant service industries encompass public services, which encompass education, commerce, personal services, professional services, and tourism, which is growing despite U.S. sanctions: in 2023, 5.4 million foreign tourists visited Iran (+52% year-on-year).

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 16.3 34.4 49.4
Value Added (in % of GDP) 12.5 40.2 46.9
Value Added (Annual % Change) 1.4 4.4 2.1

Source: World Bank - Latest available data.

 

Find more information about your business sector on our service Market Reports.

 
 
Monetary Indicators 20162017201820192020
Iran Rial (IRR) - Average Annual Exchange Rate For 1 MUR 869.81963.601,204.211,186.884,382.32

Source: World Bank - Latest available data.

 
 

Find out all the exchange rates daily on our service Currency Converter.

Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
47,2/100
World Rank:
168
Regional Rank:
14

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 

Business environment ranking

Definition:

The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

Score:
3.58/10
World Rank:
79/82

Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024

 

Country Risk

See the country risk analysis provided by Coface.

 

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Foreign Trade in Figures

Iran is relatively open to foreign trade, which accounts for around 52% of its GDP (World Bank, latest data available). The country has an observer status at the World Trade Organization (WTO) since 2005 and is not a member of any regional trade blocs. Exports are spearheaded by crude oil and petroleum products (reaching a five-year high in 2023), followed by ethylene polymers and acyclic alcohols. On the other hand, imports are led by telephones (8.4%), maize or corn (6.4%), wheat and meslin (4.7%), soya beans, whether or not broken (2.7%), sunflower-seed, and safflower or cotton-seed oil (2.6% - data Comtrade).

In 2022, Iran’s main export partners were China (29.8%), Iraq (13.3%), Türkiye (9.0%), the United Arab Emirates (7.3%), and Afghanistan (2.7%), whereas imports came chiefly from the United Arab Emirates (31.2%), China (24.1%), Türkiye (10.0%), Germany (3.6%), and Russia (3.1% - data Comtrade). The government is aiming to diversify the country's exports, given that diversification of non-oil exports would lower the economy’s vulnerability.

The country generally has a positive trade balance thanks to oil exports; however, its scope is largely dependent on global oil prices. According to figures from WTO, in 2022, Iran exported USD 77.2 billion worth of goods against USD 55.4 billion in imports (+7.7% and +13.2% y-o-y, respectively). Concerning services, exports stood at USD 6.5 billion and imports at USD 11.9 billion. In the same year, the trade balance was estimated to be positive by 2% of GDP, from 1.3% one year earlier (World Bank).

 
Foreign Trade Indicators 20192020202120222023
Imports of Goods (million USD) 41,82838,75749,08658,55265,276
Exports of Goods (million USD) 65,71846,91671,64697,85391,188
Imports of Services (million USD) 15,0067,54411,48616,1500
Exports of Services (million USD) 10,9534,8185,8249,2660
Imports of Goods and Services (Annual % Change) -32.5-29.724.19.2n/a
Exports of Goods and Services (Annual % Change) -17.3-12.85.27.3n/a
Imports of Goods and Services (in % of GDP) 27.324.421.517.9n/a
Exports of Goods and Services (in % of GDP) 23.519.422.819.8n/a
Foreign Trade (in % of GDP) 50.843.844.437.7n/a

Source: WTO – World Trade Organisation ; World Bank , Latest Available Data

 

Main Partner Countries

Main Customers
(% of Exports)
2021
China 29.8%
Iraq 13.3%
Türkiye 9.0%
United Arab Emirates 7.3%
Afghanistan 2.7%
See More Countries 37.9%
Main Suppliers
(% of Imports)
2021
United Arab Emirates 31.2%
China 24.1%
Türkiye 10.0%
Germany 3.6%
Russia 3.1%
See More Countries 28.0%

Source: Comtrade, Latest Available Data

 
 

Main Products

67.3 bn USD of products exported in 2021
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals, crude 28.3%
Petroleum gas and other gaseous hydrocarbonsPetroleum gas and other gaseous hydrocarbons 12.4%
Polymers of ethylene, in primary formsPolymers of ethylene, in primary forms 6.8%
Acyclic alcohols and their halogenated,...Acyclic alcohols and their halogenated, sulphonated, nitrated or nitrosated derivatives 4.2%
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 4.2%
See More Products 44.1%
53.0 bn USD of products imported in 2021
Telephone sets, incl. telephones for cellular...Telephone sets, incl. telephones for cellular networks or for other wireless networks; other apparatus for the transmission or reception of voice, images or other data, incl. apparatus for communication in a wired or wireless network [such as a local or wide area network]; parts thereof (excl. than transmission or reception apparatus of heading 8443, 8525, 8527 or 8528) 8.4%
Maize or cornMaize or corn 6.4%
Wheat and meslinWheat and meslin 4.7%
Soya beans, whether or not brokenSoya beans, whether or not broken 2.7%
Sunflower-seed, safflower or cotton-seed oil and...Sunflower-seed, safflower or cotton-seed oil and fractions thereof, whether or not refined, but not chemically modified 2.6%
See More Products 75.1%

Source: Comtrade, Latest Available Data

 
 

To go further, check out our service Import-Export Flows.

 

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Sources of General Economic Information

Ministries
Ministry of Finance and Economic Affairs
Ministry of Industry, Mine & Trade
Ministry of Cooperatives, Labour and Social Welfare
Statistical Office
Statistical Center of Iran
Iran Statistical Society
Central Bank
Central Bank of Iran
Stock Exchange
Tehran Stock Exchange
Search Engines
Google Iran
Iran Internet Pages
Economic Portals
Pars Times

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Political Outline

Current Political Leaders
Supreme Leader: Ayatollah Ali Hoseini KHAMENEI (since June 1989)
President: Ebrahim RAISI (since 3 August 2021)
Next Election Dates
Presidential election: June 2025
Parliamentary election: 2028
Main Political Parties
Fundamentalist and conservative groups often dominate the political sphere in Iran. The Supreme Leader and lifetime officeholder, Ayatollah Khamenei, exerts enormous influence over the parliament.

The main political groups are:
- Coalition Council of Islamic Revolution Forces (SHANA): conservative coalition of parties, right-wing
- Unity Council
- Voice of the Nation
- People's Alliance of Islamic Revolution
- Combatant Clergy Association

- Executives of Construction Party
- Front of Islamic Revolutionary Stability
- Islamic Coalition Party
- Militant Clerics Society (MRM)
- Moderation and Development Party
- National Trust Party (HEM)
- Progress and Justice Society
- Union of Islamic Iran People's Party.
Type of State
Islamic Republic. Theocratic republic based on a parliamentary democracy.
Executive Power
The chief of state is the Supreme Leader of the Islamic Revolution appointed for life time by the Assembly of Experts. The Supreme Leader is the Commander-in-Chief of the armed forces, controls the military intelligence and security operations and has sole power to declare war. The head of the government is the President who is elected by popular vote for a four-year term. The Council of Ministers (cabinet) is selected by the President with legislative approval. The President enjoys executive powers, except for matters directly related to the Supreme Leader.
Legislative Power
The legislature is unicameral. The parliament consists of Islamic Consultative Assembly having 290 seats with its members elected by popular vote to serve four-year terms. The Parliament must get the laws validated by the Guardian Council which checks if the laws suggested do not go against Islamic principles. The Parliament has real powers in Iran. It can in particular decide the dismissal of a minister. The President of Iran cannot dissolve the parliament directly but he can make this recommendation to the Supreme Leader. The Guardian Council, an appointed and constitutionally mandated 12-member council with considerable power, can approve or veto legislative bills from the Islamic Consultative Assembly, supervises elections, and approves or forbids candidates seeking office to the Assembly of Experts, the Presidency and the parliament. Six of its twelve members are Islamic faqihs (experts in Islamic Law) selected by the Supreme Leader of Iran, and the other six are jurists nominated by the Head of the Judicial system (who is also appointed by the Supreme Leader), and approved by the Iranian Parliament.
 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
174/180
Evolution:
173/180
 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Not Free
Political Freedom:
6/7
Civil Liberties:
10/60

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

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COVID-19 Country Response

Travel restrictions
Regularly updated travel information for all countries with regards to Covid-19 related entry regulations, flight bans, test and vaccines requirements is available on TravelDoc Infopage.
To find information about the current travel regulations, including health requirements, it is also advised to consult Travel Regulations Map provided and updated on a daily basis by IATA.
Import & export restrictions
A general overview of trade restrictions which were adopted by different countries during the COVID-19 pandemic is available on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
Economic recovery plan
For the general overview of the key economic policy responses to the COVID-19 pandemic (fiscal, monetary and macroeconomic) undertaken by the government of Iran, please consult the country's dedicated section in the IMF’s Policy Tracker platform.
Support plan for businesses
For an evaluation of impact of the Covid pandemic on SMEs and an inventory of country responses to foster SME resilience, refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.

 

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Latest Update: April 2024