Skip to main content

Will Iran's economy collapse under coronavirus crisis?

While the country’s economy will certainly take a massive hit by the ongoing pandemic, Iran has shown resilience toward such crises in the past.
People wear protective face masks and gloves, amid fear of coronavirus disease (COVID-19), as they walk at Tajrish market, ahead of the Iranian New Year Nowruz, March 20, in Tehran, Iran March 18, 2020. Picture taken March 18, 2020. WANA (West Asia News Agency)/Ali Khara via REUTERS ATTENTION EDITORS - THIS PICTURE WAS PROVIDED BY A THIRD PARTY - RC22NF92HAWR
Read in 

There is no doubt that the current coronavirus crisis will undermine the Iranian economy and lead to a major contraction in the country’s gross domestic product. Some early estimates project a contraction of up to 3%, though it is too early to offer a reliable assessment. The Iranian government has already announced a number of measures to support vulnerable social classes as well as businesses that will be hit hard by the current economic downturn. Yet with the government itself heavily burdened by budget deficits, external sanctions, mismanagement as well as a collapse in the global oil price — what impact will these measures have?

Evidently, the very first challenge in designing and implementing the right stimulus to Iranian businesses is the fact that the government itself is the largest economic player in the country as opposed to being the regulator of economic sectors. This means that direct stimuli such as bailouts will mainly refer to major state or semi-state companies and defeat the actual purpose.

Access the Middle East news and analysis you can trust

Join our community of Middle East readers to experience all of Al-Monitor, including 24/7 news, analyses, memos, reports and newsletters.


Only $100 per year.