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

 

Economic Indicators

Iran's economy is characterized by its reliance on hydrocarbon resources, a vibrant agricultural sector, and a diverse service industry, with a significant state involvement in the manufacturing and financial services sectors. 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 the World Bank, in fiscal year 2023/24, GDP growth accelerated to 5%, fuelled by strong performance in the oil sector and services. Oil GDP rose by 14.7%, supported by tighter global markets and higher export volumes aided by price discounts, while the non-oil sector expanded by 3.6%, driven mainly by services. GDP growth is expected to slow in the medium term, with FY 2024/25 growth easing due to tighter fiscal and monetary policies and the fading impact of the oil-driven rebound in FY 2023/24 amid weakening global demand. Non-oil growth will remain limited by ongoing sanctions, energy shortages, and economic uncertainty.

In FY 2023/24, government finances came under pressure as oil revenues fell short of targets as a result of U.S. sanctions. Although tax revenue met expectations, the budget deficit rose by 0.6 percentage points year-on-year to an estimated 3.4% of GDP, further widened by substantial off-budget spending, including cash transfers under the Targeted Subsidies Program. The 2024/25 budget law reflects a more cautious fiscal approach, with restrained spending and conservative revenue forecasts. The general government debt-to-GDP ratio was estimated at 34.6% in 2024, up by 0.6% year-on-year, and is expected to increase marginally in 2025 (34.9% - data IMF). Inflation eased in the first five months of 2024/25, with headline and core inflation falling to 31.6% and 34.7% year-on-year in August—down 23.9 and 12.2 percentage points from April 2023 peaks. The decline was driven by lower global commodity prices, easing inflation expectations, and tighter monetary policy, including bank balance sheet limits, stricter reserve requirements, and higher interbank rates. Inflation is expected to decline further but remain elevated, straining low-income households. Tighter monetary policy may also slow real sector growth, as 90% of firms rely on bank financing (data from World Bank).

The labour market is recovering, but challenges remain as an ageing population and continued human capital flight further constrain economic growth and fiscal stability. Employment growth lowered the unemployment rate to 7.7% in FY 2023/24, but labour force participation remained low at 41.2%, with only 14.3% of working-age women active in the workforce, highlighting the need for more job creation. Moreover, poverty is expected to decline modestly, from 21.9% in 2022/23 to 20% in 2023/24 and 19% in 2024/25. Poor households are predominantly rural, uneducated, and female-headed, and have historically seen limited gains from economic growth. Lastly, the country’s GDP per capita (PPP) was estimated at USD 19,606 in 2024 by the IMF.

 
Main Indicators 20232024 (E)2025 (E)2026 (E)2027 (E)
GDP (billions USD) 372.82434.24463.75498.49532.56
GDP (Constant Prices, Annual % Change) 5.03.73.12.82.4
GDP per Capita (USD) 4,3475,0135,3005,6405,965
General Government Gross Debt (in % of GDP) 34.034.634.935.235.3
Inflation Rate (%) 40.731.729.527.525.8
Unemployment Rate (% of the Labour Force) 8.18.08.48.89.0
Current Account (billions USD) 10.3012.5313.9115.0815.98
Current Account (in % of GDP) 2.82.93.03.03.0

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

Note: (e) Estimated Data

Main Sectors of Industry

Iran has a labour force of 28.3 million out of its 90.6 million population. Agriculture contributes 12.8% of the GDP, employing 14% of the active population (World Bank, latest data available). Only 10% 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 (the world's largest producer), wheat, rice, oranges, tea, and cotton. According to FAO, cereal production in 2024 was estimated at 22.4 million tonnes, approximately 10% above the average. The wheat harvest, finalised at the end of September 2024, was estimated at 14 million tonnes, also around 10% higher than the five-year average. Wheat import requirements for the 2024/25 marketing season (July to June) are forecast at 1.3 million tonnes, approximately 65% below the average, reflecting the ample domestic wheat production harvested in 2024.

The industrial sector employs 35% of the workforce and contributes 36.2% 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 proven crude oil reserves in the world) and gas (2nd place in reserves in the world), copper, lead, zinc, etc. Iran’s average crude oil production reached 3.257 million barrels per day (bpd) in 2024, up from 2.884 million bpd in 2023. Alongside ramping up production, Iran has been actively seeking to expand its oil sales, particularly in Asian markets where demand remains robust. China remains a major buyer of Iranian crude, while other regional clients have also expressed interest in maintaining imports despite Western pressure. 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 jewellery are also vital to the economy. The manufacturing sector as a whole is estimated to account for 19% of GDP.

The services sector contributes to 48.3% 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 2024, 7 million foreign tourists visited Iran (+20% year-on-year – data Minister of Cultural Heritage, Tourism, and Handicrafts).

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 14.3 35.0 50.7
Value Added (in % of GDP) 12.8 36.2 48.3
Value Added (Annual % Change) 0.2 7.1 3.8

Source: World Bank - Latest available data.

 

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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.

 
 

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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

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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 2023, Iran’s main export partners were China (34.8%), Turkey (16.5%), India (7.7%), Pakistan (7.1%), and Armenia (4.5%); whereas imports came chiefly from China (34.4%), the United Arab Emirates (19.9%), Turkey (10.5%), Brazil (7.9%), and Germany (4.3% - data OEC). 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 2023, Iran exported USD 97.3 billion worth of goods against USD 66 billion in imports (-0.5% and +12.8% y-o-y, respectively). In the same year, when computing goods and services, the trade balance was estimated to be negative by 3.8% of GDP, from a surplus of 2% one year earlier (World Bank). According to the Iran Customs Administration (IRICA), during March–October 2024, Iran’s total foreign trade amounted to USD 99.7 billion, comprising USD 60.2 billion in exports—including oil, technical services, and engineering—and USD 39.5 billion in imports. Non-oil exports saw a notable 15% increase, reaching USD 32.5 billion, while exports of crude oil and refinery products totalled USD 27 billion. Engineering service exports contributed an additional USD 700 million. Imports excluding gold stood at USD 36.1 billion, with standard gold bullion imports adding a further USD 3.4 billion.

 
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) -31.6-29.724.17.53.0
Exports of Goods and Services (Annual % Change) -20.6-12.85.28.217.1
Imports of Goods and Services (in % of GDP) 27.324.421.524.828.0
Exports of Goods and Services (in % of GDP) 23.519.422.826.824.2
Foreign Trade (in % of GDP) 50.843.844.451.652.2

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

 
 

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Sources of General Economic Information

Ministries
Ministry of Finance and Economic Affairs
Ministry of Industry, Mine & Trade
Ministry of Foreign Affairs
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 4 June 1989)
President: Masoud PEZESHKIAN (since 30 July 2024)
Next Election Dates
Presidential election: 2028
Parliamentary election: February 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): Islamic theocracy, neoliberalism, conservative coalition of parties, right-wing
- Voice of the Nation: moderate conservative group, social conservatism, liberal legalism
- Front of Islamic Revolution Stability (PAIRF): far-right, Islamism
- Combatant Clergy Association (UCIRF): centre to centre-right

- Unity Council
- Executives of Construction Party
- Islamic Coalition Party
- Moderation and Development Party
- National Trust Party (HEM)
- Union of Islamic Iran People's Party.
Type of State
Islamic Republic. Theocratic republic with features of a parliamentary democracy, where democratic institutions operate under the strict supervision of unelected clerical bodies.
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 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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Latest Update: May 2025