Despite a 20% surge in oil exports, Iran's GDP growth in the first half of the current Iranian calendar year starting March 21 significantly declined due to a recession in other sectors, such as agriculture, industries, and the service sector.
New data from the Central Bank of Iran (CBI) reveals that the country's GDP growth has slowed since the beginning of 2024. During the summer, GDP growth stood at 2.7%, which is half of the 2023 growth rate.
The GDP growth rate has fallen across all sectors except agriculture. However, calculations by Iran International indicate that the Central Bank's figures are overly optimistic and, in some cases, manipulated.
For instance, while Iran's Statistical Center and the Research Center of the Parliament reported a 1% decline in the industrial and mining sector's share of the GDP during the summer due to repeated power outages, the Central Bank claims a 1.7% economic growth in this sector during the same period.
The industrial sector is important for Iran’s economy, as part of it is based on or related to oil-related sectors and accounts for around 15% of Iran's GDP and employs around a third of the country's 25 million workers.
Another example is the agriculture sector. According to the Statistical Center of Iran, this sector's output has been in decline since 2021 and the share of employment in the sector declined by 1% this summer, reaching 14.5%.
Yet, despite worsening droughts and widespread power outages, the Central Bank claims a 2.8% growth in agriculture during the summer.
The International Monetary Fund (IMF) previously predicted that Iran's economic growth would decline from this year until 2028, eventually reaching 2%.
Oil: The driving force of economic growth
In the last two years of Donald Trump's presidency (2018-2020), Iran faced negative economic growth due to US sanctions. However, with the Biden administration's policy of appeasement toward the Iranian government, Iran's economic growth turned positive again.
Details from the Central Bank's statistics show that the driving force behind Iran's economic growth over the past 3-4 years has been the oil sector. During this period, Iran's oil exports quintupled, reaching 1.6 million barrels per day in 2024 in average.
Iran exports 40% of its oil and gas condensate output, and the growth in this sector has had a significant impact on boosting the country’s economic growth.
It remains unclear how Iran’s economic growth will fare considering a sharp drop in oil exports this fall and the anticipated start of Donald Trump’s administration, which has promised to revive the "maximum pressure" campaign against Iran. Data from oil tracking companies such as Kpler and Vortexa indicate a 500,000-barrel-per-day decline in Iran's oil exports since October.
At the same time, the head of Iran's Agricultural Guilds Chamber recently reported a 30% reduction in autumn crop planting, and an official mentioned a 20% damage to poultry farms due to power outages in autumn.
This fall, in addition to power cuts, Iran has drastically reduced gas supplies to industries, exacerbating the recession in these sectors.
A Look at key economic indicators for Iran in 2024
The year 2024 has brought significant challenges for Iran, including severe electricity and gas shortages, a sharp depreciation of the rial, two direct confrontations with Israel, weakening of its regional proxy groups and the fall of Bashar al-Assad's regime in Syria as well as the end of Joe Biden's presidency.
This summer, Iran faced a 25% electricity deficit, which has been continuing in autumn due to gas shortage. In fall, the daily gas shortage peaked at 30% of the country's gas demand.This seriously impacts industries, particularly the steel sector, which has witnessed a 46% decline this year.
Since the beginning of 2024, the US dollar's value in Iran has surged by 60%, and inflation, even according to official estimates, has exceeded 32%. Over the past six years, Iran has consistently ranked among the ten countries with the highest inflation rates.
Official statistics show that despite the addition of 5 million people to Iran’s population since 2018, when US sanctions were reintroduced, the number of employed individuals has only increased by 300,000 to 25.1 million.
Poverty rates in Iran have also risen during this period. Even according to the Islamic Republic's official statistics, about 28% of Iran’s population was below the poverty line in 2018. Now, this figure has climbed to 33%, with some parliamentarians, experts, and domestic media outlets claiming the real number exceeds 50%.
One of the few positive aspects of Iran's economy is the increase in oil exports to China. Data from Kpler and Vortexa shows that Iran's average daily oil exports in 2024 stood at approximately 1.6 million barrels in average, 34% higher than in 2023 and almost double the 2022 levels, but the figure plunged to 1.3 mb/d in November.
Iran’s economic vows will worsen if Donald Trump acts upon his threats to reduce Tehran’s oil exports to China, which provided close to $40 billion in revenues until this fall.
Since Khamenei explicitly said that he was speaking as the leader of the Islamic Republic and not offering an analysis, his words could signal that hostility toward Syria’s new government is now official policy for the Islamic Republic. This may serve as a directive for the Quds Force, the IRGC’s foreign operations branch.
This speech, Khamenei’s 1,936th during his 35-year tenure, delivered a clear message about the Islamic Republic’s position on Syria's new administration. While many regional nations have expressed hope for peace and stability in Syria, Khamenei underscored the need to oppose the new government, essentially advocating for its overthrow.
"The young Syrian has nothing to lose. His university is unsafe, his school is unsafe, his home is unsafe, his street is unsafe, his life is unsafe. What should he do? He must stand strong and determined against those who designed this insecurity and those who implemented it, and God willing, he will triumph over them," Khamenei said.
Khamenei also denied the existence of proxy groups tied to the Islamic Republic, even though such groups are widely recognized globally as Iran’s proxies. Organizations like Hezbollah, Hamas, Islamic Jihad, the Houthis, and Hashd al-Shaabi have openly acknowledged their dependence on and allegiance to Iran.
Hassan Nasrallah, Hezbollah’s leader, who was recently killed in an Israeli strike, repeatedly affirmed that Hezbollah relies entirely on Iran for its financial, military, and logistical support. This dependency is not unique to Hezbollah. Both the Houthis and Hamas have frequently acknowledged receiving financial and military assistance from Iran. Mahmoud al-Zahar, a senior Hamas leader, once disclosed that during a visit to Tehran, Qasem Soleimani personally handed him $22 million in cash, which Hamas representatives transported back to Gaza in suitcases. These statements from the leaders of these groups directly challenge Khamenei’s assertions that these forces operate independently and are not proxies of Iran.
Khamenei further claimed that the Islamic Republic does not need proxies and is capable of acting directly against the US and Israel if necessary. This assertion contradicts his admission just ten days earlier in another speech, where he acknowledged that Iran’s efforts to support Bashar al-Assad were thwarted by Israeli and US air forces.
Not only did Khamenei deny the existence of Iran's proxy forces, but he also refused to acknowledge the evident setbacks faced by Iran and its allied groups in the region. While Israel has destroyed Hamas infrastructure in Gaza, eliminated many of its leaders, including Ismail Haniyeh and Yahya Sinwar, and targeted Hezbollah’s command network, Khamenei continues to claim victory. These statements starkly contrast with the on-the-ground realities. Regional and international analysts widely agree that Iran's regional policies have failed. Israel's military strategy has successfully pushed Hezbollah away from the border, limiting its access to Israeli territory. Despite these setbacks, Khamenei persists in his analyses, insisting that Hezbollah has not been defeated.
Khamenei’s refusal to accept the realities in the region and his continued reliance on flawed analyses stem more from obstinacy than from genuine miscalculation. Rather than acknowledging his mistakes, he attempts to reshape facts to align with his vision. This stubbornness has wasted Iran’s financial and human resources while deepening animosity among regional nations and governments toward Iran.
Moreover, Khamenei not only dismisses external realities but also attempts to silence domestic critics. In his recent speech, he targeted opponents of the Islamic Republic's regional policies, branding them as mercenaries. This follows earlier threats in which he accused dissenting analysts of treason and demanded punitive measures against them. This repressive approach highlights Khamenei's growing concern over the potential domestic fallout from his regional policy failures and their impact on the Islamic Republic’s stability.
Denying failures and silencing critics will not resolve any issues; rather, they will exacerbate internal dissatisfaction and further isolate the Islamic Republic both regionally and globally. This persistent denial and obstinacy have already inflicted significant costs on the Iranian people. Khamenei's insistence on opposing Syria's new government and risks not only deepening regional instability but also fueling anti-Iran sentiment among the Syrian population and neighboring countries.
