Iran's Economy Contracts 10.1% as Oil Output and Industry Collapse
The Iranian economy contracted by 10.1% in the first quarter of this year, according to data released by the Statistical Center of Iran (SCI). The decline in Gross Domestic Product (GDP) at constant 2021/2022 prices was from 2,425 trillion tomans in spring 2025 to 2,179 trillion tomans in spring 2026.
The oil and gas sector recorded a 26.4% reduction in value added, making it the largest contributor to overall negative growth. The sector's share of total GDP shrank from 25.6% in spring 2025 to 21% in spring 2026.
Reduced activity in the oil and gas sector alone accounted for 6.74 percentage points of the total 10.1% economic contraction, but the negative growth of 4.6% in the non-oil economy demonstrates that the economic crisis extends far beyond energy.
The industrial and mining group shrank by 14.7% in spring 2026, with manufacturing output dropping by 2.5%, construction falling by 6.4%, and water and electricity production declining by 5.4%. The services sector recorded negative growth of 4.8%, with transportation, warehousing, and communications experiencing one of the steepest drops, falling by 17%.
Final household consumption declined by 4%, while government consumption dropped by 1.7%. Gross fixed capital formation fell by 8.4%, an indicator signaling reduced investment and declining productive capacity for years to come. Investment in machinery fell by 9.7%, and investment in construction dropped by 6.4%.