The World Bank has projected that Iran’s economy will contract by nearly 2% this year, with the shrinking trend expected to continue into next year.
According to the latest World Bank report, released on Tuesday, October 7, the average GDP growth for the MENA-P region (Middle East, North Africa, Afghanistan, and Pakistan) is estimated at 2.8% for this year.
This figure is higher than the 2.6% growth projection the World Bank made in its April report.
The report states that this improvement mainly stems from stronger economic activity in the Gulf Cooperation Council (GCC) countries, following an earlier-than-expected end to oil production cuts and the expansion of non-oil sectors.
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However, the institution warned that developing oil-exporting countries will experience a sharp decline in growth, largely due to disruptions caused by regional conflicts and reduced oil production levels.
According to the report, Iran’s economy will contract by 1.7% this year and by a further 2.8% next year.
In its April report, the World Bank had projected a 0.7% growth for Iran’s economy in 2026.
The World Bank attributed this outlook to simultaneous declines in oil exports and non-oil activities due to intensified sanctions—including the reinstatement of United Nations sanctions—and the economic consequences of the recent 12-day war.
With the end of the 30-day period set in the UN Security Council’s snapback mechanism, all previous UN sanctions against Iran’s regime were reinstated at 3:30 a.m. Tehran time on Sunday, September 28.
In recent weeks, Iranian regime officials have warned of a “harsh response” to the sanctions’ reinstatement, threatening measures such as withdrawal from the Non-Proliferation Treaty (NPT) and the pursuit of a nuclear bomb.
The World Bank stressed in its report that the entire region remains affected by the consequences of ongoing conflicts in Syria, Yemen, Lebanon, the West Bank, Gaza, and Afghanistan.
These conflicts have triggered humanitarian crises, mass displacement, and severe economic stagnation.
Overall, the institution raised its forecast for economic growth in the Middle East, North Africa, Afghanistan, and Pakistan for 2025 but revised downward its projection for the coming year.
