Economy of Iran

GDP: USD 383 billion. (Close to 44th largest)

In 2023, Iran was the number 36 (out of 195) economy in the world in terms of GDP ($405B current US$), the number 92 (out of 226) in total exports, the number 125 (out of 196) economy in terms of GDP per capita (current US$).

Population: 92 million people. 

Neighbour Iraq has 46 million ppl, close to $280 billion GDP

Some of the largest cities: Tehran (population ~9.6 million), Mashhad (population ~3.4 million), and Isfahan (population ~2.3 million).

Agriculture: 6.9% (2016 est.)

Industry: 35.3% (2016 est.)

Services: 55% (2017 est.)[6]

Oil and natural gas are Iran’s most important exports, accounting for 82 percent of the country’s export revenues. Other exports include chemicals, plastics, fruits, ceramic products and metals. Iran’s main exports partners are: China (36 percent of total exports), Iraq (25 percent) and Turkey (18 percent). Others include: UAE and India.

In 2023, the top exports of Iran were Ethylene Polymers ($1.85B), Iron Ore ($1.3B), Acyclic alcohol derivatives (halogenated, sulphonated, nitrated) ($871M), Petroleum Gas ($631M), and Refined Copper ($560M).  The top destinations were China ($4.59B), Turkey ($2.18B), India ($1.02B), Pakistan ($943M), and Armenia ($597M).

In 2023, the top imports of Iran were Broadcasting Equipment ($3.24B), Motor Vehicles; parts & accessories ($1.27B), Corn ($1.27B), Soybeans ($1.24B), and Vehicle Bodies (including cabs) for the motor vehicles (8701 to 8705) ($1B). The top origins were China ($10B), United Arab Emirates ($5.78B), Turkey ($3.06B), Brazil ($2.3B), and Germany ($1.26B).

Historical view

• During 1960–76, Iran enjoyed one of the fastest growth rates in the world: the economy grew at an average rate of 9.8 percent in real terms, and real per capita income grew by 7 percent on average. As a result, GDP at constant prices was almost five times higher in 1976 than in 1960. This stellar performance took place in an environment of relative political stability, low inflation (Figure 2), and improved terms of trade, as evidenced by the rising oil price relative to import prices (Figure 3). Both oil output and oil prices increased significantly during the period: oil production grew at an annual average rate of 10 percent, while oil prices relative to import prices increased by 214 percent during this subperiod.

• The growth trend was reversed during 1977–88, reflecting the turmoil in the aftermath of the 1979 revolution, the eight-year war with Iraq, the international isolation of Iran, the increased state dominance of the economy, and the plummeting of oil output and revenue. In 1988, oil production was only 36 percent of its 1976 level, and oil prices were 40 percent lower in real terms. This resulted in real GDP growth of Ó2.4 per year on average. Excluding oil output, non-oil GDP also declined, albeit at a more moderate pace (0.5 percent per year).

• With the reconstruction effort and a partial recovery in oil output, real economic growth recovered during 1989–2002 to an average of 4.7 percent per year. This period, however, was marked by sharp fluctuations in the growth pattern, as the postwar economic boom (1989–93) was followed by the stagnation of 1993–94, when the economy was hit by lower oil prices, lack of external financing, and economic sanctions. The ensuing severe debt crisis, together with inappropriate macroeconomic policies, had an adverse effect on growth, which hovered around 3.6 percent from 1995 to 2000. During 2000–03, real GDP growth picked up to 6 percent as a result of significant progress in economic reforms—such as trade liberalization, exchange rate unification, an opening up to FDI, and financial sector liberalization—but also because of high oil prices and expansionary fiscal and monetary policies.

Oil exports are much lower from the peaks of 1970s

https://wiiw.ac.at/the-iranian-economy-challenges-and-opportunities-dlp-4599.pdf

SANCTIONS

Sanction has been affected a large part of Iran economy; limiting access to finance and foreign exchange, decreasing investment, rising unemployment and inflation and led to economic slowdown. However, it seems to reduce the economy's dependence on oil, improve domestic production capacity and reduce vulnerability to external factors are the opportunities created by the sanctions. 

Iran’s Oil Position

• Reserves: Among the largest proven oil reserves in the world (~157 billion barrels, top 5 globally). Also the world’s 2nd largest natural gas reserves (after Russia).

• Exports: Historically 2–3 million barrels/day, but since sanctions (2012, 2018), often <1 mbpd. Much smaller than Saudi Arabia or Russia today.

• Revenue Dependence: Government budget typically 40–60% reliant on oil & gas income (varies by sanctions intensity).

Comparative Spectrum  of Oil Wealth Funds

Country	Model	SWF / Buffer Fund	Governance Quality	Use of Oil Wealth
Norway	Gold standard	GPFG ($1.6T)	Transparent, independent	Saved, invested abroad, rule-based
UAE / Kuwait / Qatar	Good	ADIA, QIA, KIA (hundreds of $bn)	High but less transparent	Mix of foreign and domestic investment
Saudi Arabia	Mixed	PIF (~$900bn)	Political use, big domestic projects	Diversification attempt but risky
Russia / Kazakhstan	Middle ground	NWF, Kazakh National Fund	Politicized, partially stabilizing	Used to fund budgets in downturns
Nigeria / Angola / Venezuela / Iraq	Weak	SWFs exist but small or raided	Low transparency	Consumed for budgets, corruption, instability
Iran	Weak	NDFI (2011, <$100bn equivalent, unclear now)	Politicized, low transparency, raided	Funds diverted to subsidies, deficits, survival

Top Oil Revenue Countries (by export earnings)

As of the 2020s, the leading countries by oil exports (and thus oil revenue) are:

• Middle East: Saudi Arabia, Iraq, UAE, Kuwait, Iran, Qatar (oil & gas)

• Eurasia: Russia, Kazakhstan, Azerbaijan

• Africa: Nigeria, Angola, Algeria, Libya

• Americas: USA (largest producer, but also a large consumer), Canada, Venezuela, Mexico, Brazil

• Others: Norway (smaller production than Saudi/Russia but high-value exports)

Many of these countries derive 50–90% of government revenue from oil and gas exports (Saudi, Iraq, Kuwait, Angola, Nigeria, etc.).