The war in Iran has intensified the country's economic crisis, severely impacting household budgets and businesses, and raising concerns that millions of middle-class families are slipping towards poverty.

Mina, a housewife in Iran, described the situation: "Since the war started last year, we have become poorer every day.” She noted that even basic food items like chicken have become luxuries, reflecting the sharp decline in purchasing power.

The International Monetary Fund forecasts a 5.4% contraction in Iran's economy for 2026, with inflation expected to approach 69%. The World Bank has warned that ongoing conflict, weaker trade, and prolonged uncertainty are weighing heavily on the economy.

Economist Ahmad Alavi, a Sweden-based researcher, explained that while the war did not create Iran's economic crisis, it has sharply intensified it. "Iran entered the conflict with inflation already above 40%, a weakening currency, chronic budget deficits and years of sanctions,” he told Deutsche Welle. He added that damage to infrastructure, disruption of trade through the Strait of Hormuz, internet shutdowns, and rising inflation expectations have accelerated the collapse in purchasing power.

Alavi also noted that "many salaried workers and pensioners have fallen below the poverty line for the first time because incomes have failed to keep pace with inflation.” He highlighted that the collapse of the rial and soaring inflation have prevented market growth. Meanwhile, China has moved quickly to fill part of the gap left by suppliers in Dubai.

Mina expressed a loss of hope for the future, saying, "We don't talk about the future anymore.”

Sources