Knowledge Note

"A sharp exchange rate depreciation has accelerated inflation, with negative consequences for the livelihoods of vulnerable households."

The COVID-19 pandemic has amplified the impact of economic sanctions and existing structural imbalances in Iran’s economy. The decline in revenues led the government to issue new debt and sell assets on the stock market, increasing financial risk exposures. A sharp exchange rate depreciation has accelerated inflation, with negative consequences for the livelihoods of vulnerable households. The growth outlook remains subdued due to trade restrictions and the ongoing global pandemic.