On 20/9, the Statistical Center of Iran announced that the country's gross domestic product (GDP) declined by 10.1% in its first fiscal quarter (late March to June) compared to the same period last year. Excluding oil, Iran's GDP fell by 4.6% during that quarter year-on-year.

Iran's economic growth began to decline following the outbreak of the Middle East conflict in late February. U.S.-Israel airstrikes prompted Tehran to retaliate by blockading the Strait of Hormuz, causing global oil prices to surge. The conflict subsequently spread to several other countries in the Middle East.

The largest decline in the first quarter was observed in oil and gas extraction, which plummeted by 26.4% compared to the previous year. The industrial and mining sectors also experienced a drop of nearly 15%.

The services sector, a significant contributor to Iran's economy, also recorded a decrease of 4.8%. Agriculture, however, proved an exception, growing by 2.3%.

Oil plays a vital role for Iran, as energy exports are the nation's primary source of foreign currency. Reuters reported that the volume of Iranian crude oil loaded onto ships sharply decreased from 2 million barrels per day in March to 220,000-255,000 barrels per day in August. This reduction was due to the U.S. Navy's blockade of Iranian seaports, which disrupted shipping operations in the Strait of Hormuz.

While the Statistical Center of Iran only released the figures without explicitly attributing the decline to the conflict, the late March to June period coincided with the early stages of the Middle East conflict. To date, the conflict has disrupted the country's energy, trade, and transportation sectors.

Before the conflict, Iran's economy had long contended with hyperinflation and currency devaluation stemming from international sanctions. The International Monetary Fund (IMF) projects inflation there to approach 70% by the end of this year. Last month, the Iranian rial also hit a new low against the USD, with over 2 million rial needed to exchange for 1 USD.

Ha Thu (according to AFP, Reuters)