TL/DR –
Before the war, Iran’s economy was already under pressure due to international sanctions, high inflation, and corruption, with national income per person dropping from $8,000 in 2012 to $5,000 in 2024. The UN estimates that the conflict could result in 4.1 million additional Iranians falling into poverty due to the destruction of factories, infrastructure, and industrial sites. Economic analyst Hadi Kahalzadeh warns that the combination of war, inflation, and collapsing consumer demand is threatening much of Iran’s labor market and could put half of Iranian jobs at risk.
Economic Crisis Looms Amid War in Iran
Iran’s economy, already struggling due to international sanctions, corruption and high inflation, faces the risk of further deterioration amid escalating conflict. Pre-war, Iran’s per capita income saw a drastic drop from nearly $8,000 in 2012 to around $5,000 by 2024.
Economists anticipate rapidly worsening conditions. As per United Nations Development Program estimates, the ongoing conflict could drive an additional 4.1 million Iranians into poverty.
Infrastructure and industrial sites across Iran are bearing the brunt of thousands of airstrikes. Iranian media channel EcoIran reports that over 23,000 factories and businesses have experienced severe impacts.
Gholamhossein Mohammadi, Iranian Deputy Work and Social Security Minister, stated that direct job losses from the destruction amount to a million. Further economic disruptions likely led to another million job losses.
The war has notably disrupted Iran’s industrial production and trade networks. Israeli strikes on major petrochemical facilities last month led to widespread forced unpaid leave and disruption in steel production which has rippled across numerous manufacturing industries.
Major layoffs have occurred due to insufficient steel supply. Trailer manufacturer Maral Sanat laid off 1,500 employees and Borujerd, one of Iran’s largest textile producers, dismissed around 700 workers.
Quincy Institute for Responsible Statecraft‘s economic analyst, Hadi Kahalzadeh, warns that the mix of war, inflation and plummeting consumer demand poses serious threats to Iran’s labor market.
According to Kahalzadeh, disruptions to shipping and imports could put up to 50% of Iranian jobs at risk, driving more citizens into poverty. Imported material shortages have forced manufacturers, including dairy plants, to halt operations.
Official statistics reveal an alarming rise in unemployment insurance applications, with about 147,000 applications in the last two months – nearly triple compared to the same period last year.
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