Page 6 - Iran OUTLOOK 2025

• 2.1 GDP
In 2024, Iran's economy exhibited modest growth, with the International Monetary Fund (IMF) projecting a real GDP increase of 3.7%. This expansion was primarily driven by a rise in oil exports, particularly to China, and strengthened economic ties with countries such as Russia. Despite these gains, the broader population continued to face economic challenges, including high inflation and unemployment rates, indicating that the benefits of growth were not evenly distributed across society.
• 2.2 FX
Throughout 2024, the Iranian rial (IRR) experienced significant depreciation against major currencies, reflecting the nation's ongoing economic challenges. In early November, the rial traded at approximately IRR690,000 to the US dollar. By mid-December, it had declined to around IRR756,000, and as of December 18, it reached a historic low of IRR777,450 per dollar.
This downward trajectory is attributed to several factors, including escalating regional tensions, uncertainties surrounding US foreign policy under President-elect Donald Trump, and internal economic pressures such as high inflation and an energy crisis.
In response, the Central Bank of Iran has intervened by injecting foreign currency reserves into the market, aiming to stabilise the exchange rate. Despite these efforts, the rial's value continues to erode, underscoring the country's persistent economic and geopolitical challenges.
In response to the rial's depreciation, the Iranian government has announced plans to unify its multiple exchange rates, aiming to eliminate the disparities between the official and free market rates. This move is intended to enhance transparency, reduce arbitrage opportunities and stabilise the currency.
Historically, Iran has maintained multiple exchange rates to manage subsidies and control imports, but this system has often led to economic distortions and corruption. The unification process is expected to be gradual, with careful monitoring to mitigate potential inflationary pressures and ensure a smooth transition for businesses and consumers.
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