Last year, Iran experienced 5% economic growth due to a significant increase in oil exports and government spending. However, according to the IMF’s projections, published on Tuesday, October 22, Iran’s economic growth will drop to 3.7% this year and only 3.1% in 2025. The decline will continue, reaching just 2% by 2029.
As a result, the anticipated 8% economic growth target set in Iran’s Seventh Five-Year Development Plan (2024-2028) is unlikely to be achieved.
Previously, Iranian regime President Massoud Pezeshkian emphasized that to achieve 8% economic growth, $200 to $250 billion in investment is required. Pezeshkian noted, “We have no more than $100 billion available in the country, meaning if we gather all the money we have, we would reach $100 billion and could invest it. Therefore, we need $100 billion in foreign investment to achieve 8% economic growth.”
However, IMF data shows that the ratio of total investments made in the country to its GDP will not change by 2029. In fact, it will decline from 40% in 2023 to below 37% in 2029.
United Nations statistics indicate that annual foreign direct investment in Iran has dropped to $1.5 billion in recent years. On the other hand, figures from Iran’s Central Bank reveal a significant increase in capital flight, with more than $20 billion leaving the country in the first nine months of last year, marking a historic record.
The surge in government debt
IMF data shows that the total net government debt last year was 40 quadrillion rials (approximately $59.7 billion). This figure is expected to rapidly rise to 230 quadrillion rials (approximately $343.283 billion) by 2029.
The government has not yet released a report on its total debt, but the head of the National Development Fund has stated that the government owes the fund $100 billion. Additionally, figures from the Central Bank indicate that the government’s debt to Iran’s banking system has exceeded 16.5 quadrillion rials (approximately $24.626 billion).
The surge in government debt from the banking system has led to an increase in liquidity to over 90 quadrillion rials (approximately $134.328 billion) and has contributed to runaway inflation in the country.
In its latest forecast, the IMF has predicted that inflation in Iran will reach 31.7% this year and 29.5% next year.
