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Iran's economy faced a severe downturn in autumn 2026 due to a sharp decline in the value of the rial, which fell by over 50% against the dollar. Inflation worsened, reaching approximately 70% over 12 months. This led to a significant drop in gross domestic product (GDP) by 10.1% in the first quarter of 2026, with the oil and gas sectors shrinking by nearly 26%, alongside declines in industrial and service productions. Additionally, the currency devaluation caused import costs to rise, increasing inflationary pressures and harming the purchasing power of households, especially among middle and lower classes. Alongside this, reduced oil exports resulted in decreased government revenues and a growing budget deficit, as both income and expenditures were under heavy pressure due to high war and reconstruction costs, estimated at around $270 billion in damages. Furthermore, U.S. restrictions on oil exports and limited foreign trade coincided with the economic deterioration, significantly obstructing efforts to stabilize the economy and achieve sustainable growth.
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