Why has Iran’s economy not collapsed under US war pressure?

Iran's economy continues to function despite prolonged sanctions and military pressure, according to welfare economist Hadi Kahalzadeh. The analyst defines economic collapse as famine and the state's inability to pay employees or deliver basic services—conditions not yet present in Iran. Kahalzadeh, a fellow at the Quincy Institute and Brandeis University, told Al Jazeera that the combination of war, blockade, and sanctions, while severe, is unlikely to trigger collapse in the near term.

The Iranian economy has developed relative resilience through decades of self-sufficiency policies. Agriculture, manufacturing, and services sectors have reduced dependence on oil revenues. Informal labor markets, cross-border trade networks, and maritime commerce have helped sustain economic activity despite external pressure.

However, ordinary Iranians face acute hardship. Inflation has reached approximately 90 percent, with food prices tripling over the past year for staples including meat, eggs, and cooking oil. Currency depreciation against the US dollar makes imported goods increasingly expensive. The monthly minimum wage falls below $100, supplemented only by modest government cash transfers and electronic coupons for essential goods.

Economic shocks are absorbed through inflation and currency depreciation rather than immediate collapse, Kahalzadeh explained. This mechanism preserves some production and import incentives, keeping goods available but unaffordable for most households. The state attempts to mitigate household costs through subsidies and cash assistance—an expensive survival strategy that prevents systemic failure while transferring economic burden directly to citizens.