In the early days of the new Iranian year (which began on March 21), Iran’s economy is grappling with crises such as the rapid depreciation of the national currency, a lack of investment, inflation of at least 35%, a noticeable decline in people’s purchasing power, and issues arising from energy imbalances.
The Research Center of the Iranian Parliament previously reported that in the year 1404 (starting March 21, 2025), Iran’s economy will face serious challenges, including declining economic growth, rising inflation, and increasing poverty.
These economic issues, combined with sanctions and regime’s diplomatic crises, have led many experts—and even some government officials in Iran—to warn about the country’s economic situation in 1404 (2025).
The Iranian regime neither has the ability nor the intention to control inflation. Even raising nominal interest rates is not an option, as it could lead to the collapse of Iran’s already fragile banking system and widespread bankruptcies.
Iran: Rising Inflation and Exchange Rates, Economy on the Brink of Collapse
The policy of “artificial exchange rate control” requires constant currency market interventions, which is a continuation of the failed strategy of past years. This policy has led to the depletion of over $100 billion (and, according to some estimates, more than $200 billion) in foreign exchange reserves over the past decade, while the price of the US dollar has continued to rise.
As the most indebted economic entity in the country, the Iranian regime actually benefits from inflation—as long as it does not trigger social unrest—because higher inflation erodes the real value of government debt.
The root cause of Iran’s economic problems, including inflation, lies within the regime and its policies. In other words, while external factors such as sanctions, global political conditions, and geopolitical risks do have an impact, they are not the main causes of these issues; rather, they only exacerbate the existing problems.
The Iranian regime has estimated oil exports at two million barrels per day, but given the policies of the new U.S. administration, this target is unlikely to be achieved, which will further deepen Iran’s budget deficit.
Severe Inflation Wave and the Legitimacy Crisis of the Iranian Regime in 2025
All these factors indicate that Iran’s economy will face a severe wave of inflation in 2025, with some economists predicting inflation rates as high as 50%.
A functional government would never block its own paths to free trade and economic, political, and cultural exchanges with the world. However, the Iranian regime, in order to maintain its grip on power and continue its dictatorship, will never abandon its interventionist policies in the region or its expansion of terrorism.
Ali Khamenei, the Supreme Leader of the Iranian regime, will intensify repression in parallel. The prospect of change through negotiations with the Iranian regime is nothing but a mirage. This claim is backed by 45 years of deception, hostage-taking, warmongering, torture, and executions—all tactics the regime has used to maintain its grip on power.
In the year 1403 (March 21, 2024 – March 21, 2025), the Iranian regime executed more than 1,153 people.
Widespread government corruption and a lack of investment in the oil and gas sector have prevented these resources from meeting the needs of society, causing people to become increasingly impoverished. This mounting economic and social pressure will ultimately lead to large-scale uprisings in Iran.
In 2024, following the killing of Mahsa Amini by the regime’s security forces, the Iranian regime was on the brink of collapse. However, through extreme repression and the killing of more than 750 protesters, it temporarily managed to suppress the nationwide uprising.
In the oil and energy sector, external pressures and sanctions have eliminated any possibility of short-term solutions or temporary relief. These pressures will only intensify further.
Iran is currently deprived of any cooperation, services, or technology from Western companies. Due to limited oil exports and a lack of investment, it cannot even procure these resources indirectly through intermediaries except at significantly higher costs. As external pressures mount, Iran’s energy sector will continue its downward spiral at an accelerated pace.
All these factors highlight the Iranian regime’s inability to resolve crises and mega-crises, the roots of which date back many years. Not only has the government failed to implement any real solutions, but in many cases, its officials have actively worsened these crises.
However, the fundamental issue is the Iranian regime’s legitimacy crisis among the public. This crisis has manifested in various ways, from widespread anti-government uprisings to historically low voter turnout in elections.
Despite all this, Iranian officials continue to insist on maintaining their past approaches, particularly in domestic, foreign, and economic policies. Given the escalating economic and social crises in Iran, it is inevitable that new waves of anti-regime uprisings will emerge, and the Iranian regime should brace itself for major upheavals.
