Outlook for Iran’s economy in 2025
By Amin Shojaei
Guest contributor
Iran’s economy has faced numerous challenges in recent decades, ranging from international sanctions to fluctuations in oil prices and instability in economic policies. The present article analyzes the state of Iran’s economy at the start of 2025, especially in relation to global and regional trends. Moreover, it addresses existing challenges, proposes solutions, and provides forecasts for the future of Iran’s economy, supported by statistics and charts.
Current state of Iran’s economy
In recent years, Iran’s economy has experienced negative growth, influenced by factors such as economic sanctions and ineffective domestic policies. In 2023, the inflation rate averaged over 40%, and the national currency underwent a significant devaluation. According to a report by the Central Bank of Iran, the country’s GDP grew modestly by 1.5% in 2024, which is considerably lower than the global average of 3.2% and the Middle East regional average of 4.8%.
Shortages in infrastructure, energy
Electricity shortages
In 2024, Iran faced a 25-gigawatt electricity deficit, leading to widespread outages across various industrial and residential sectors. This situation not only disrupted industrial production but also imposed significant stress on the daily lives of citizens.
Gas shortages
A decline in gas production from shared fields, combined with increasing domestic consumption, has created challenges in meeting the country’s energy needs. This issue has directly impacted gas-dependent industries, resulting in reduced production and higher product prices.
Aging infrastructure
Many of Iran’s infrastructures, including railways, the electricity grid, and oil and gas facilities, are in a critical state due to insufficient investment and lack of major repairs. Estimates indicate that over 40% of Iran’s oil and gas facilities require immediate modernization.
Comparison with global, regional economies in 2025
While many countries are leveraging technological transformations and opportunities in the digital economy, Iran’s economy continues to rely heavily on traditional industries such as oil and gas. For instance:
Global perspective
China, with a 5% GDP growth rate, and India, with 6% growth, are advancing steadily. In contrast, forecasts suggest that Iran’s economy will experience growth of less than 2%.
Regional perspective
In the Middle East, Saudi Arabia, with $328 billion in oil revenue in 2024, and Iraq, with $120 billion, are significantly ahead of Iran, which generated only $40 billion in the same year. Furthermore, regional countries such as the UAE have diversified their economies, capturing a larger share of global markets.
Challenges facing Iran’s economy
1. International sanctions, non-membership in FATF
Iran remains on the FATF blacklist, which severely restricts access to the international banking network. The lack of membership in this organization has increased trade transaction costs and reduced Iran’s attractiveness for foreign investment.
2. Inflation, currency
devaluation
According to reports, Iran’s inflation rate reached 45% in 2024, and the value of the Rial depreciated by over 30% against the dollar. This has led to a decline in the purchasing power of Iranians and increased pressure on lower-income segments of society.
3. Dependency on oil, gas
Over 50% of the Iranian government’s revenue still comes from oil exports. Declining global demand for fossil fuels and intense competition in the global market have created uncertainty about Iran’s economic future.
4. Inefficient management
The lack of coordination in economic policies, including the failure to reform banking structures and the absence of financial transparency, has eroded public trust in the government. Inefficient management has also led to resource wastage and reduced productivity across various economic sectors.
5. Brain drain
Statistics show that over 70,000 scientific and professional elites left the country in 2024, reducing human capital and innovation potential. Advanced regional countries such as Qatar and the UAE have taken advantage of this opportunity to attract skilled professionals.
Solutions for improving current situation
1. Enhancing financial
transparency, structural reforms
Increasing the transparency in the economic policies of the country and implementing banking structure reforms can boost public and investor confidence. Enacting anti-corruption laws and improving regulatory performance will also play a key role.
2. FATF membership
Exiting the FATF blacklist and striving to establish international banking relations can improve Iran’s access to foreign financial resources. This step will lower trade costs and enhance Iran’s attractiveness to foreign investors.
3. Investment in
renewable energy
Reducing dependency on oil and gas through the development of renewable energy sources will diversify Iran’s economy. For instance, investing in solar and wind projects can increase the capacity for clean energy production.
4. Development of
knowledge-based industries
Supporting startups and technology-driven companies can steer the economy toward sustainability. Advancing modern technologies can increase economic productivity and create new job opportunities.
5. Infrastructure improvement
Investing in the modernization of critical facilities such as the electricity grid, railways, and gas transmission lines can enhance Iran’s economic productivity. A comprehensive plan for infrastructure renovation is essential.
Forecast for Iran’s economy in 2025
Assuming the current situation persists, the outlook for Iran’s economy in 2025 remains bleak. According to forecasts:
Inflation
The inflation rate is expected to exceed 50%, further intensifying the financial burden on the population.
Economic growth
GDP growth is predicted to remain below 2%, indicating Iran’s inability to compete with regional countries.
Inequality
The economic inequality index is projected to rise, deepening social crises.
Possible scenarios
Optimistic scenario
If sanctions are eased and structural reforms are implemented, economic growth could reach 4%. Reforming economic structures could reduce inequality and attract foreign investment.
Pessimistic scenario
If the current situation continues, inflation and unemployment rates will rise, and social inequality will deepen. Reduced oil production and declining exports could further exacerbate the economic crisis.
Stable scenario
With the implementation of limited reforms and better resource management, Iran’s economic growth could reach approximately 2.5%. However, this figure would still remain below the regional average.
Iran’s economy in 2025 will face structural, political, and international challenges that, if not addressed urgently, will lead to a continuation of stagnation and inflation. Comparisons indicate that Iran has not sufficiently utilized its economic opportunities compared to regional countries like Saudi Arabia and Iraq.
Ultimately, proposed solutions such as enhancing transparency, joining the FATF, and developing the infrastructure could pave the way for improving the country’s economy. However, achieving these goals requires political will and fundamental reforms. Strengthening international relations, reducing dependency on oil, and investing in modern technologies are crucial steps to place Iran on the path to sustainable growth.