{"id":229267,"date":"2026-01-09T15:00:15","date_gmt":"2026-01-09T15:00:15","guid":{"rendered":"https:\/\/www.newsbeep.com\/il\/229267\/"},"modified":"2026-01-09T15:00:15","modified_gmt":"2026-01-09T15:00:15","slug":"as-iran-protests-intensify-where-is-its-economy-heading","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/il\/229267\/","title":{"rendered":"As Iran protests intensify, where is its economy heading?"},"content":{"rendered":"

Protests in Iran<\/a>, triggered by the plummeting rial and the soaring cost of living, are the “desperate gasps” of people seeking economic stability, analysts say, and addressing internal institutional failures is vital for the future.<\/p>\n

The unrest<\/a> began 12 days ago within the narrow aisles of the Grand Bazaar in Tehran, after the Iranian rial fell to a record low against the US dollar. <\/p>\n

Authorities have attempted a dual approach to the protests \u2013 acknowledging the economic crisis<\/a> and offering dialogue with demonstrators, while meeting more forceful displays of dissent with violence.<\/p>\n

“The protests are the desperate gasps of a society that has lost its economic buffer,” said Mohammad Farzanegan, professor of Middle East economics at the Centre for Near and Middle Eastern Studies in Germany. <\/p>\n

\u201cWe are seeing \u2018economic self-defence\u2019 from the bazaar: merchants are closing shops because in an environment where the currency loses value by the hour, rational pricing becomes impossible. Selling inventory today often means not having enough capital to restock tomorrow.\u201d<\/p>\n

The Iranian rial<\/a> has been declining steadily in the past few months and was trading at more than 146,000 to the US dollar on the parallel market on Thursday, according to Bonbast.com, which monitors unofficial exchange rates.<\/p>\n

\"\"<\/p>\n

Protesters take to the streets across Iran<\/p>\n

Meanwhile, inflation has soared, with the rate at 52.6 per cent in December, official data showed.<\/p>\n

To placate the public amid the protests, the government announced a new monthly allowance. For a family of four, it is offering 40 million rial monthly credit, worth approximately $26 at the current market exchange rate of 150,000 rials to the dollar, breaking down to about 22 US cents per person daily, said Mr Farzanegan. <\/p>\n

The move \u201cis a desperate fiscal manoeuvre that is fundamentally insufficient\u201d, he said. <\/p>\n

Alex Vatanka, senior fellow at the Middle East Institute, said a small monthly cash credit or coupon scheme cannot \u201coffset the structural collapse of confidence in the economy or the multiyear erosion of purchasing power\u201d. <\/p>\n

In the current environment, symbolic handouts without credible stabilisation plans do little to appease broad social discontent, he said. <\/p>\n

\u201cFar from calming anger, paltry allowances are widely viewed as insufficient and even insulting, given skyrocketing prices, deepening poverty and the perceived prioritisation of ideological institutions over household survival,\u201d he added. <\/p>\n

Iran’s economy has suffered<\/a> under the extraneous sanctions reimposed by Washington in 2018, after US President Donald Trump in his previous term withdrew the US from the Joint Comprehensive Plan of Action nuclear deal. Those sanctions are yet to be lifted. <\/p>\n

The economy was given a jolt when so-called snapback sanctions were imposed by Britain<\/a>, France<\/a> and Germany<\/a> at the UN General Assembly last September.<\/p>\n

\u201cRenewed UN and US sanctions \u2013 including snapback measures \u2013 have compounded Iran\u2019s chronic economic weaknesses by constraining oil exports, hard currency earnings and access to global financial markets,\u201d Mr Vatanka said. <\/p>\n

\u201cThis has heightened currency scarcity, amplified inflationary pressures and robbed the Central Bank of reliable tools to stabilise the rial. Sanctions aren\u2019t the only driver \u2013 domestic mismanagement matters, too \u2013 but they have materially worsened economic conditions.\u201d<\/p>\n

Iran\u2019s economic growth is forecast to grow slightly to 1.1 per cent this year, from about 0.6 per cent in 2025, the International Monetary Fund estimates. The IMF also expects Iran\u2019s inflation rate to decline marginally to 41.6 per cent this year, from 42.4 per cent in 2025. <\/p>\n

\u201cThe snapback has been the decisive psychological and legal trigger for the current crisis,\u201d Mr Farzanegan said. \u201cThe snapback didn’t just add more sanctions, it broke the last bit of social trust in the currency.\u201d<\/p>\n

Currently a \u201cbarometer of political fear\u201d, the rial has no floor as long as the combination of external economic warfare led by the US and internal institutional rot remains, Mr Farzanegan said. <\/p>\n

\"\"<\/p>\n

Without restoring access to foreign currency, meaningful fiscal reform, or a credible stabilisation strategy, prolonged depreciation is likely, according to Mr Vatanka.<\/p>\n

\u201cThere\u2019s no clear floor: markets will price in risk and uncertainty \u2013 and if confidence collapses further, new lows will follow. That sharp devaluation was already a central driver of unrest.\u201d<\/p>\n

In line with the currency collapse, supply bottlenecks, subsidy reforms, subsidies being cut and weak confidence, inflationary conditions will persist, he said. \u201cInflation isn\u2019t just cyclical \u2013 it is structural.\u201d<\/p>\n

Consumer prices look set to rise higher, especially since, to fund the new monthly allowance for its 90 million people, the state must increase the money supply, Mr Farzanegan said. This will add more \u201coil to the fire” of an inflation rate already above 50 per cent.<\/p>\n

\u201cStabilisation is only possible through a dual breakthrough: a diplomatic de-escalation to end the economic siege and a genuine internal campaign against the systemic corruption that my studies show is the primary driver of sanction-induced instability.\u201d<\/p>\n

Trump threat <\/p>\n

Amid the protests, US President Donald Trump also warned Iran that if Tehran \u201ckills peaceful protesters\u201d, the US \u201cwill come to their rescue\u201d and that the Iranian regime would be \u201chit very hard\u201d<\/a>. US strikes on Venezuela and the capture of President Nicolas Maduro<\/a> have also fuelled speculation that similar action could be attempted in Iran. <\/p>\n

The capture of Mr Maduro is a \u201cseductive but dangerous narrative\u201d, warned Mr Farzanegan. <\/p>\n

\u201cWhile kinetic steps might decapitate a regime, they do not repair a hollowed-out society,” he said. “In a multi-ethnic country of 90 million people, an attempted external overthrow risks a catastrophic drama, leading to state failure, a security vacuum and mass regional displacement, rather than a clean democratic transition.”<\/p>\n

Stability will require \u201cending the collective punishment of Iranians through the US economic war, alongside threats of military aggression by both Israel and the US, and addressing internal institutional failures\u201d, he added. <\/p>\n

Mr Vatanka agreed that stabilisation and economic growth would require political recalibration. That includes empowering competent governance, restoring trust, re-engaging with the global economy, reducing rent-seeking and weapons-heavy spending, and pursuing credible diplomacy to ease sanctions. <\/p>\n

\u201cWithout these, relief efforts are palliative, not transformative,\u201d he said. <\/p>\n","protected":false},"excerpt":{"rendered":"Protests in Iran, triggered by the plummeting rial and the soaring cost of living, are the “desperate gasps”…\n","protected":false},"author":2,"featured_media":229268,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[114,2867,184,85,932,87,46,2865,789],"class_list":["post-229267","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-business-team","tag-economy","tag-il","tag-inflation","tag-iran","tag-israel","tag-standard","tag-story"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/229267","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=229267"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/229267\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/229268"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=229267"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=229267"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=229267"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}