Iran’s economy: Counting the cost of war

Summary

Business Daily – Iran’s Economy: Counting the Cost of War (April 13, 2026)

Host: Rahul Tandon
Guests: Behrang Tajdin (BBC Persian Service Economic Correspondent), Esfandiar Batmanghelidj (CEO, Bourse and Bazaar)
Source: BBC World Service

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Episode Overview

This episode of Business Daily investigates the devastating economic impact of the ongoing war in the Middle East on Iran. With severe infrastructure damage, massive unemployment, a collapsing currency, and an enduring internet blackout, the program explores how everyday Iranians are bearing the brunt of both war and long-standing international sanctions. Through the firsthand voices of Iranian citizens and expert analysis, the episode paints a dire portrait of survival, upheaval, and uncertainty challenging the country's future prosperity.

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Key Discussion Points and Insights

1. Immediate Impact of War on Daily Life

• Widespread Unemployment & Business Closures
  • Many Iranians have lost their jobs or been placed on unpaid leave due to the war. Office buildings and small businesses have been destroyed.
  • “Many people have lost their job because of the war or have been placed on unpaid leave. Many company offices have been damaged.” (Iranian Citizen/Listener, 03:30)
• Soaring Inflation and Financial Desperation
  • Extreme inflation has made it nearly impossible for salaries to keep up with living costs. Many are unable to pay rent, debts, or buy basic necessities.
  • “Everything on the market is expensive. Paying back our bank debt, rent or insurance has become hard because of the inflation. I swear to God, our salaries are not enough anymore. I feel I'm going crazy.” (Iranian Citizen/Listener, 03:56)
• Personal Accounts of Economic Suffering
  • "I don't see a bright future for Iranians at the end of this. ... Those attacks on some petrochemical and steel companies are going to directly affect people soon." (Rahul Tandon and Iranian Citizen/Listener, 03:38)
  • "Our lives have fallen back due to the war. ... Our checks getting bounced back. We can't go on like this for much longer." (Iranian Citizen/Listener, 04:10)

2. Collapse of Key Industries and Infrastructure

• Damage Estimates
  • The first month of war alone is estimated to have caused $100 billion in damage, more than a year (or even two years) of Iran’s total oil exports.
  • "The first month of the war imposed damage of around $100 billion to Iranian economy and infrastructure." (Behrang Tajdin, 06:17)
• Industrial Ripple Effects
  • Attacks on petrochemical plants have crippled the supply of fertilizers, impacting rural food production and the broader food industry, leading to a knock-on effect across both urban and rural economies.
  • "When petrochemical plants are attacked, they can't produce fertilizers, which means that the farmers cannot produce as much food as they could before." (Behrang Tajdin, 05:31)

3. Currency Collapse and Inflation Surge

• Rial Devaluation
  • Decreased foreign exports mean less foreign currency enters Iran, accelerating the rial’s collapse and further fueling inflation.
  • "We will probably see rial losing more of its value, which will also feed inflation." (Behrang Tajdin, 07:33)
• Official vs. Real Inflation
  • Reported inflation exceeds 50%, with basic food prices more than doubling in just 12 months—even those with relatively secure government jobs are struggling.

4. The Internet Blackout – Modern Economic Devastation

• Unprecedented Shutdown
  • Iran’s nationwide internet blackout has persisted for over 40 days, the longest on record, devastating digital and remote work sectors.
  • “Establish the Internet Today small businesses are falling apart.” (Pedram Sultani, cited by Rahul Tandon, 10:31)
• Impact on Workers and Businesses
  • Many professionals have lost foreign-based and remote jobs overnight as VPNs became prohibitively expensive or unreliable.
  • "My partner and I work in web design for a few Canadian clients and we lost all our income overnight. ... Using VPN is so expensive it's impossible to do any serious work like that." (Iranian Citizen/Listener, 10:52)
  • "My job depended directly on the Internet ... Now with the Internet cut off, I've completely lost my job ... it's also really hard to find in person work." (Iranian Citizen/Listener, 11:07)
• Structural Consequences
  • Even with limited carve-outs (like banking), millions relying on e-commerce and other digital services are directly and harshly affected.
  • “This is actually a self-inflicted harm ... trying to restrict access on the Internet, knowing very well that this is going to have a profound impact on the economy.” (Esfandiar Batmanghelidj, 11:44)
  • Unique to Iran: “This is really the first time in which the US has faced an adversary ... with a digitally enabled economy. ... We’re seeing actually the impacts of a war on an economy much like those in Europe or the US." (Esfandiar Batmanghelidj, 12:29)

5. Sanctions, Blockade Threats, and the Cost of Rebuilding

• Sanctions Relief as the Only Path
  • The strength and breadth of international sanctions mean Iran cannot rebuild key infrastructure or replace destroyed industrial machinery without relief.
  • “...If you want to rebuild a major industrial facility, you’re going to need machinery and equipment ... often not produced domestically in Iran. ... Even if there is some kind of ceasefire, it will be very difficult for Iran to actually rebuild that infrastructure... making the demand for sanctions relief even more important.” (Esfandiar Batmanghelidj, 14:39)
• Oil Revenue Not Enough
  • Oil prices would have to rise far beyond current levels (> $150/barrel) to make up for lost industrial and export income.
  • “In order to offset the lost revenue from just petrochemical and steel, it would have to be somewhere north of $150 a barrel.” (Behrang Tajdin, 06:55)
• Blockade and Strait of Hormuz Rhetoric
  • Some Iranian officials have floated taxing shipping through key straits, but this is viewed more as political posturing than a realistic economic solution.
  • "There will not be an insistence on a toll ... that puts Iran on a collision course with its regional neighbors ... The sanctions relief is far more valuable for Iran economically than any revenues they might gain from traffic in the streets." (Esfandiar Batmanghelidj, 15:49)

6. International Negotiations and Possible Relief

• Current Negotiations
  • There may be a pathway to lifting both "secondary" and "primary" U.S. sanctions as part of ongoing ceasefire negotiations.
  • "If primary sanctions are indeed lifted, the benefit for the Iranian economy ... that pays for the reconstruction in and of itself." (Esfandiar Batmanghelidj, 17:10)

7. Mounting Civil Unrest and Uncertain Future

• Widespread Desperation and Anger
  • Listeners’ voices paint a picture of growing hopelessness, fears about basic survival, and deepened dissatisfaction with the government.
  • "It feels like we're sinking deeper and deeper into a swamp. ... I keep thinking about a situation where in a month I’m sitting with my family with no water, no electricity, nothing, and someone blows out the candle and we go to sleep." (Iranian Citizen/Listener, 14:08)
• Risk of Further Unrest
  • Economic protests have increased since 2017, with the state responding through severe repression.
  • "Economic protests have become a feature of domestic politics in Iran since basically 2017. ... I fully expect that if the economy does not recover, there will be further unrest." (Esfandiar Batmanghelidj, 18:33)
  • The government’s ability and willingness to repress protests is described as “incredible.”

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Notable Quotes and Memorable Moments

• Desperation in the Streets:
  • "If I go to a hotel, I need money. Where is the money? What do I have? $300? My monthly salary? How do I get diapers and milk for my daughter?" (Iranian Citizen/Listener, 13:56)
• The Earthquake Metaphor:
  • "It is like you were experiencing an earthquake for 39 days and it has just stopped for now. You don't know whether it's going to start soon again. And more importantly, you have no idea what is left of the roof above your head. Not much." (Behrang Tajdin, 08:20)
• Economic Standstill:
  • "The Iranian economy has moved into an economy of survival. ... Large parts of the economy have gone into a full state of freeze and that causes recession because many people are not paid." (Behrang Tajdin, 04:41)

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Important Timestamps

• 01:44 – Opening, main theme introduced: Iran’s economy amid war.
• 03:30–04:10 – Iranian citizens describe unemployment, inflation, and fear.
• 05:31 – Discussion on rural impact and breakdown of agricultural supply chains.
• 06:17 – Estimate: $100 billion damage in one month.
• 07:09 – Prospects for oil-driven recovery debunked.
• 10:20–11:07 – Internet blackout: direct listener testimonies.
• 11:44–12:29 – Batmanghelidj: Economic damage from the Internet shutdown and impact on digitally enabled economy.
• 14:39 – Sanctions relief as key for reconstruction.
• 15:49 – Risks of Straits of Hormuz tolls; sanctions relief’s vital importance.
• 17:10 – Lifting of primary sanctions could be transformative.
• 18:33 – Mounting protests and harsh repression expected if the economy doesn’t recover.

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Tone and Style

The tone throughout is somber, urgent, and empathetic—conveying the severity of the crisis while giving space to personal stories of hardship and fear. Expert guests and the host maintain a clear, analytical approach while underlining the human cost and deep sense of uncertainty about Iran’s economic future.

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For a deeper understanding of how war, sanctions, and government policy intertwine to shape Iran’s bleak economic reality, this episode is an essential listen. It offers both granular personal testimony and macro-level expertise—making sense of a complex, rapidly evolving national crisis.

Transcript

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[Rahul Tandon]

Hello and welcome to Business Daily from the BBC World Service. I'm Rahul Tandon. And to welcome Today we're looking at how the war in the Middle east is impacting Iran's already faltering economy.

[Iranian Citizen/Listener]

Many people have lost their job because of the war. Many company offices have been damaged and

[Rahul Tandon]

asking how much will it cost to rebuild it?

[Behrang Tajdin]

There are some estimates, and I would say these are conservative estimates, that would suggest that the first month of the war imposed a damage of around $100 billion.

[Rahul Tandon]

And where will that money come from?

[Esfandiar Batmanghelidj]

The sanctions relief is far more valuable for Iran economically than any revenues they might gain from traffic in the street.

[Rahul Tandon]

That's all coming up here on Business Daily from the BBC. Those are the sounds that many Iranians have been waking up to. So here on Business Daily, we wanted to look at the state of Iran's economy. Let's be honest, it is very difficult to get an accurate picture of what is taking place inside Iran. The Internet has been turned off now for more than 40 days. Some people though have been using Starlink, that's a satellite based Internet system developed by Elon Musk. It's harder for the authorities to shut down and some Iranians have been using that to communicate with the rest of the world. And they've been sending messages about the economic challenges that they're facing on a daily basis to our Persian Service. The Iranians sending us those messages are often putting their lives in danger by doing that. So we voiced up what they've told us.

[Iranian Citizen/Listener]

Many people have lost their job because of the war or have been placed on unpaid leave. Many company offices have been damaged.

[Rahul Tandon]

I don't see a bright future for Iranians at the end of this. With all these attacks, Iran won't be a place we can live in anymore. So many small businesses have already disappeared and the others will fade away too. Those attacks on some petrochemical and steel companies are going to directly affect people soon.

[Iranian Citizen/Listener]

We have all become miserable. Everything on the market is expensive. Paying back our bank debt, rent or insurance has become hard because of the inflation. I swear to God, our salaries are not enough anymore. I feel I'm going crazy.

Our lives have fallen back due to the war. We can't leave the house because it's dangerous and we can't work how we are supposed to make a living. It's a really bad situation. Everyone is facing the same difficulties. Our checks getting bounced back. We can't go on like this for much longer.

[Rahul Tandon]

Amongst those gathering and listening closely to those messages, the has been Behrang Tajdin, the BBC Persian Service's economic correspondent.

[Behrang Tajdin]

Since the start of the war, the Iranian economy has moved into an economy of survival. That means that people, if they have any money, they will only spend it on essentials, which means large parts of the economy have gone into a full state of freeze and that causes recession because many people are not paid. On top of that, we have had so many attacks on Iranian infrastructure industries and as a result of that it has brought a large wave of unemployment to Iran.

[Rahul Tandon]

Can I ask you about Iran as a country as well? Because there are the urban areas and that is where a lot of people will be losing their jobs. But there is a huge rural community in Iran as well. Do we know what the situation is like for them?

[Behrang Tajdin]

It's not going to be easy because you know when petrochemical plants are attacked, then they can't produce fertilizers, which means that the farmers cannot produce as much food as they could before. On top of that you have the food industry, you know Losing access to steel and aluminium because of the attacks on steel and aluminum for factories, which means that they don't have any production to buy from the farmers. So it's not just the urban areas that are impacted.

[Rahul Tandon]

Is it possible, and it's so difficult, isn't it, to get information out of Iran to know what the cost has been so far of the war, the cost of rebuilding. Are there any figures around here?

[Behrang Tajdin]

There are some estimates, and I would say these are conservative estimates that would suggest that the first month of the war imposed a damage of around $100 billion to Iranian economy and infrastructure. And for context, that's more than a year's, probably two years worth of oil exports.

[Rahul Tandon]

We have seen an increase in the oil price. So is there some hope that if the oil price remains high and Iran can sell more oil, that this could offset some of the problems that you're talking about? It can help Iran rebuild its economy.

[Behrang Tajdin]

It could, but in order to offset the lost revenue from just petrochemical and steel, it would have to be somewhere north of $150 a barrel.

[Rahul Tandon]

We're way away from that at the moment.

[Behrang Tajdin]

We are way away from that. And there are also questions about sanctions, and this is revenue for the government. The problem is, even before the war, in just 12 months, the average food prices in Iran had more than doubled. The official inflation rate is north of 50%.

[Rahul Tandon]

We've seen the currency collapse, haven't we?

[Behrang Tajdin]

And yes, and because of the decrease in the foreign exports, it means that less foreign currency will come in, which means that we, we will probably see rial losing more of its value, which will also feed inflation. So for ordinary people, even the ones that have, for example, secure government jobs, they are seeing their money not going as far as it was going just a month ago, let alone a year ago.

[Rahul Tandon]

We heard at the beginning of this, and you have painted, I think, a really graphic picture of the challenges facing the Iranian economy. What stories are you hearing from Iranians about how hard life has become for them?

[Behrang Tajdin]

What we are hearing is a sense of desperation, a sense of very little hope. In the hours after the attacks stopped, you know, the ceasefire was announced, someone put it like this. It is like you were experiencing an earthquake for 39 days and it has just stopped for now. You don't know whether it's going to start soon again. And more importantly, you have no idea what is left of the roof above your head. Not much.

[Rahul Tandon]

Behrant Tajdin from the BBC Persian Service, they're clearly identifying the economic challenges that are now facing millions of Iranians, you're listening to Business Daily from the BBC or World Service.

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[Rahul Tandon]

I'm Rahul Tandon and today we're looking at the impact of the war in the Middle east on Iran's economy. And there is another challenge that Iranians are now facing.

[Iranian Citizen/Listener]

Internet blackout in Iran has now entered

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so there's effectively little to no Internet in Iran.

[Iranian Citizen/Listener]

Iran Internet blackout is longest nationwide shutdown

[Rahul Tandon]

on record the shutdown of the Internet Pedram Sultani, an influential figure in Iran's business community, recently posted this on X Establish the Internet Today small businesses are falling apart. Let's hear some of the messages that have been sent to our Persian service about this very issue.

[Iranian Citizen/Listener]

My partner and I work in web design for a few Canadian clients and we lost all our income overnight. I have no hope that Internet will be back anytime soon and using VPN is so expensive it's impossible to do any serious work like that.

My job depended directly on the Internet and the company I worked for was based abroad. Now with the Internet cut off, I've completely lost my job and the company doesn't want to take the risk of keeping me on. I still have rent to pay and because of the war, it's also really hard to find in person work.

[Rahul Tandon]

So how much economic damage is the Internet shutdown now? More than 40 days long. Creating Svan Diabatman Gelish is the CEO of Bourse and Bazaar, a London based think tank focused on the Iranian economy.

[Esfandiar Batmanghelidj]

This has actually become a recurring issue in Iran because at every instance of national protests, the Iranian authorities have taken tamped down on Internet access. And it has a direct impact on the livelihoods of millions of people who actually make a living in E commerce and other services that depend on Internet connectivity. So in a sense this is actually a self inflicted harm that the leaders of the Islamic Republic have undertaken, which is in their mind, for the sake of national security, trying to restrict access on the Internet, knowing very well that this is going to have a profound impact on the economy because that's going

[Rahul Tandon]

to have a huge impact, isn't it, on small businesses who use social media, but not just them, to all sectors of the economy, even the banking system.

[Esfandiar Batmanghelidj]

You know, there are carve outs in the Internet shutdown to allow some essential services like banking to persist. But generally speaking, I think what listeners should have in mind about Iran, and this is what's quite unique about this war, is that this is really the first time in which the US has faced an adversary that that is a country with a actually quite advanced, industrialized, financialized, digitally enabled economy. And so the impacts we're seeing from this war are unlike impacts we've seen in Afghanistan or Iraq. We're seeing actually the impacts of a war on an economy much like those in Europe or the US and this trade off between national security and economic stability is one that the Islamic Republic has really struggled to navigate.

[Rahul Tandon]

So we've identified the economic challenges that are now facing Iran and they will increase if this ceasefire does not hold. But Iranians have been facing economic challenges way before this war started. That is because of the impacts of sanctions and now the added pressure of a potential blockade restricting trade and oil exports. Let's hear some more messages from Iran to that have been coming into our Persian service.

[Iranian Citizen/Listener]

In the streets of Tehran, there is widespread anxiety and concern about attacks on infrastructure.

[Rahul Tandon]

People are also dissatisfied with the government's performance over the last 47 years.

[Iranian Citizen/Listener]

If I go to a hotel, I need money. Where is the money? What do I have? $300? My monthly salary? How do I get diapers and milk for my daughter?

It feels like we're sinking deeper and deeper into a swamp. What can we do as ordinary people? I keep thinking about a situation where in a month I'm sitting with my family with no water, no electricity, nothing, and someone blows out the candle and we go to sleep.

[Rahul Tandon]

You get a sense there of how difficult life is economically for so many people there. So how is Iran going to rebuild its economy when this war ends? Here's Esfandia once again. He believes that it can only be achieved if sanctions are removed.

[Esfandiar Batmanghelidj]

I think the easiest way to explain it is that the sanctions regime targeting Iran is the strongest in the world. Often we hear that the Russian sanctions regime is the strongest or largest, but it is the largest in terms of the number of entities that have been targeted. The dilemma that this poses is that if you want to rebuild a major industrial facility, you're going to need machinery and equipment. And that equipment is often not produce domestically in Iran. It needs to be imported. For example, the equipment that would be part of a major steel furnace. And so were the sanctions to remain in place, even if there is some kind of ceasefire, it will be very difficult for Iran to actually rebuild that infrastructure in a timely fashion, making the demand for sanctions relief even more important.

[Rahul Tandon]

So do you think that the Iranian authorities are looking at the economy and thinking, right, we need to have the sanctions removed if we want to rebuild, but also we need to generate some revenue from somewhere. So that's why they want to control the Straits of Hormuz and also why they want to tax ships traveling through it.

[Esfandiar Batmanghelidj]

My view is that there will not be an insistence on a toll being paid by vessels in order to fund the reconstruction, because that puts Iran on a collision course with its regional neighbors who will never accept such an arrangement. The reason that that rhetoric is emerging right now is that Iran wants to demonstrate that this is something that it has been able to do under the conditions of war. And unless the international community wants to see a new war break out in the region, they will have to accommodate Iran in certain respects. And one of those being providing broad sanctions relief. But the sanctions relief is far more valuable for Iran economically than any revenues they might gain from traffic in the streets.

[Rahul Tandon]

This is a very fluid situation. We don't know what's going to happen next. We don't know if sanctions relief is going to come. But even if it does, as we heard earlier in this edition, Iran needs at least $100 billion to rebuild from this war. Could be a lot more than that. Where is that money going to come from?

[Esfandiar Batmanghelidj]

My view here. And it's very interesting to see that at least that the early stage, as the ceasefire came together, there was an acknowledgement from the US side that they had agreed to use the 10 points that Iran had put forward as a basis for further negotiations. One of those points is on sanctions relief. And very interestingly, it is sanctions relief that is not limited to the secondary sanctions that the US has imposed on Iran, but also the primary embargo, meaning the prohibition on U.S. companies and U.S. persons from engaging with the Iranian economy. The reason this is important is that in the previous instance in which the US offered sanctions relief, only the secondary sanctions were lifted. And this created a hangover effect from the sanctions in which major international banks or multinational companies that had significant operations in the US Felt that because of the continuation of the US primary sanctions, they were unable to engage with Iran. The reason I raise this is because if primary sanctions are indeed lifted, the benefit for the Iranian economy and arguably for the regional economy in unlocking economic potential that has so far been sort of constrained, that pays for the reconstruction in and of itself.

[Rahul Tandon]

And I suppose a final key question for you is if the Iranian authorities cannot get this economy back on track, and we've already seen this year huge protests, haven't we, on the streets and we know that the Bizaris, the influential traders in Tehran, are extremely upset by the economic situation that they're facing. We are going to see more protests, aren't we?

[Esfandiar Batmanghelidj]

Economic protests have become a feature of domestic politics in Iran since basically 2017. As the economic picture has darkened for ordinary people, protests have become more frequent, the number of grievances have expanded. So I fully expect that if the economy does not recover, there will be further unrest. I also expect that the Iranian authorities will use the incredible repression that they demonstrated in January to crush those protests.

[Rahul Tandon]

We've tried on this program to bring you the voices of Iranians. It's not easy, so thank you to our Persian service for helping us with that. Clearly these are uncertain times for Iran and its economy. But as we've heard throughout this program, even if the war ends soon, and there's no guarantee that it will, there is mounting anger across the country at the economic challenges people are now facing. And whoever runs Iran solving them will not be easy. This edition of Business Daily was presented by me, Rahul Tandon. It was produced by David Can. To hear more episodes search for Business Daily wherever you get your BBC podcast.

[Iranian Citizen/Listener]

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