Switzerland Global Enterprise: Iran Markteinblicke1. April 2021
EU Sanctions Tool – Iran10. Mai 2021
Iran has a highly diverse and complex economic structure that has suffered as a result of postrevolutionary upheavals. The availability of a unique resource base, both natural and human, and
its promising geo-strategic position have endowed Iran with massive potential that has been
undermined by external sanctions as well as internal shortcomings linked to mismanagement,
incompetence and corruption.
Economic activity is relatively diverse. While the energy sector is the backbone of the economy,
it is not the dominant contributor to gross domestic product (GDP). The service sector has
dominated GDP alongside petroleum, industry, agriculture and construction. Despite the
existence of a number of distortions, such as blanket subsidies, gradual reforms are injecting
greater transparency into economic structures.
Economic developments have been heavily dependent on political dynamics. Iran is unique in
the sense that its state sector is much larger than its governmental sector. In essence, religious,
revolutionary and military institutions belong to the state as a whole but are not controlled by
the government. Instead they are controlled directly or indirectly by the Supreme Leader’s
Despite various attempts to modernize economic structures, Iran still lacks an economic
doctrine. A strategy document entitled Vision 2025 represents attempts to provide such a
strategy, but internal and external political events have made it redundant. Current policies are
driven in reaction to US sanctions and revolve around the concept of a resilient economy. The
objectives are to build domestic capacity, increase efficiency and promote exports. In parallel
with the government’s efforts to promote domestic capacity building, young entrepreneurs are
creating new domestic impetus through start-ups and knowledge-based solutions that will
further magnify the medium-term potential of the economy.
External sanctions are also reshaping many industries and leaving a footprint on government
finances. In essence, the sanctions-related decline of the petroleum sector will have implications
for the overall distribution of power, as semi-state players will be in a stronger position to
undermine a government that is in a weaker financial position.
Iran has an underutilized economy for political, cultural and external reasons. Short-termism
caused by political, legal and operational uncertainties will continue to impede realization of its
economic potential. At the same time, this crisis-ridden economy has demonstrated an ability to
adapt to new realities fast, which could prove an advantage for the economic adjustments that
will be needed following the current COVID-19 crisis.
Iran’s officials describe the current situation as an “economic war”. Sanctions and other pressure
tools are seen as “economic bombardment” that will continue as long as Iranian-US tensions
remain high. It is obvious that the short-term economic impacts have been disastrous.
Nonetheless, accompanied by appropriate policies, the Iranian economy has the potential to
regain a new balance and to start growing again.