State-run media warn of deepening stagflation, collapsing purchasing power, rising taxation, and systemic corruption draining Iran’s economy
Iran’s regime is increasingly entangled in internal factional rifts and systemic corruption while the country’s economy sinks deeper into crisis. Even state-controlled media outlets are now acknowledging signs of severe stagflation, declining production, workforce attrition, and expanding economic inequality.
What emerges from these reports is not a temporary downturn, but a structural economic breakdown marked by inflation, shrinking purchasing power, and institutionalized rent-seeking.
Small and Medium Enterprises Under Siege
According to Tose’e Irani, a significant share of Iran’s production and employment depends on small and medium-sized enterprises (SMEs). However, prolonged economic uncertainty has placed these businesses in a state of suspension and survival mode.
Companies are responding with measures such as:
- Reducing working hours
- Freezing or cutting investment
- Scaling down production capacity
- Delaying wage payments
These defensive strategies may temporarily preserve liquidity but threaten long-term production and employment.
The publication bluntly notes that workers cannot be expected to continue under conditions where wages rise by only 30 percent while inflation effectively approaches 100 percent. Such a disparity erodes real incomes and incentivizes labor force withdrawal, accelerating the hollowing-out of Iran’s productive base.
With the national currency losing significant value and purchasing power reportedly halved, businesses face stagnating sales and capital circulation bottlenecks. Social tensions further complicate workforce management, adding non-economic pressures to already fragile industrial environments.
“Economic Leeches” and Institutionalized Corruption
State-affiliated commentary has also highlighted the phenomenon of what it terms “economic leeches”—individuals and networks able to secure billions in preferential loans and facilities while ordinary businesses struggle for survival.
The criticism underscores a glaring imbalance:
- Select insiders receive vast credit allocations.
- Billions in foreign currency allocations reportedly remain unreturned.
- Currency “trustees” (exchange intermediaries) have faced little accountability.
The call is not merely for labor market adjustments but for eliminating predatory economic actors embedded within the system. The suggestion that these “leeches” are draining the lifeblood of Iran’s economy reflects mounting frustration—even within establishment-aligned media—over systemic corruption.
Taxation as the Government’s Last Resort
Tose’e Irani, reports that the Iranian economy has entered stagflation—a rare and destructive combination of recession and high inflation.
In most economies facing recession, governments reduce taxes to stimulate aggregate demand. In Iran, the opposite trend is underway.
An examination of the 1405 (2026–2027) draft budget indicates that the government is once again banking on increased tax revenues—despite:
- Persistent high inflation
- Internet disruptions
- Repeated energy-related shutdowns
- Administrative price controls
- Political and economic uncertainty
Rather than structural fiscal reform or expenditure control, taxation appears to be the primary revenue lever remaining.
The Return of Ration-Era Distortions
The newspaper Siasat-e Rooz warns of troubling developments in the government’s new electronic coupon (Kalabarg) system.
Reports indicate:
- Black-market trading of coupon credits
- Retailers cashing out credits at a 15 percent discount
Such practices effectively divert government support into intermediary profits, undermining the policy’s intended social protection function.
Observers draw parallels to Iran’s coupon-based system of previous decades, where insufficient oversight fostered corruption, rent-seeking, and public distrust. If left unchecked, the current system risks repeating that experience—transforming a support mechanism into another channel of inequality and dissatisfaction.
Four Decades of Promises, Four Decades of Inflation
The publication Jahan-e Sanat offers a stark summary of Iran’s economic trajectory: four decades of changing slogans, but persistently high inflation.
From post-war reconstruction to reformism, from populist “justice-centered” policies to technocratic governance models, successive administrations have promised economic stabilization. Yet what remains in public memory are not political declarations, but inflation rates, currency depreciation, and eroded purchasing power.
The outlet emphasizes that inflation in Iran is not episodic—it is structural.
Without:
- Fundamental banking sector reform
- Sustainable budget deficit control
- Genuine operational independence of the central bank
- Changing governments merely alters rhetoric, not outcomes.
A Structural Crisis, Not a Cyclical Downturn
Taken together, the picture is clear. Iran’s economy is grappling with:
- Stagflation
- Currency collapse
- Labor force attrition
- Rising taxation amid recession
- Institutional corruption
- Policy distortions reminiscent of past failures
Even state-aligned media now acknowledge that the crisis runs deeper than temporary mismanagement. Structural imbalances, entrenched rent-seeking networks, and fiscal dependency on extraction—rather than productivity—have locked the economy into a self-reinforcing cycle of inflation and stagnation.
As purchasing power shrinks and public trust erodes, the economic dimension of Iran’s broader political crisis becomes increasingly difficult to contain.
