Iran's Economy Reels Under Sanctions Pressure
The International Monetary Fund forecasts Iran's economy to contract by 5.4% in 2026, accompanied by an average consumer-price inflation rate of 68.9%. The economic squeeze is particularly harsh for ordinary Iranians, who face severely constrained purchasing power amidst rising prices for staples like rice and beef. A Labor Ministry official reported last week that over one million jobs had been lost by late May.
Tehran's stores remain stocked, but the high cost of living has become unsustainable for many families. The US is set to impose its 'toughest sanctions in history' on Iran from next week, with Treasury Secretary Scott Bessent indicating that states offering assistance to Tehran could face economic consequences.
China remains a key customer for Iranian oil, having bought over 80% of the country's shipments last year. However, imports have fallen significantly this month, with Chinese buyers purchasing only about 534,000 barrels per day in August, compared to an average of 1.4 million barrels per day last year.
Leland Miller, a commissioner at the US-China Economic and Security Review Commission, believes that China is preparing for retaliation against US economic pressure on Iran. Miller suggests that Beijing has found a formula for pushing back against US pressure by transforming the trade war into a broader supply chain conflict.