Manufacturing in the heartland of Iran’s renowned carpet-making industry has slowed to a near halt, while giant steel mills that once anchored the national economy have fallen silent. Hundreds of thousands of workers have already lost their jobs, and millions more now face the risk of unemployment.
Following more than five weeks of bombardment, strikes by the U.S. And Israel have hit thousands of factories. This destruction is triggering a wave of layoffs and causing prices for basic goods to skyrocket across the country.
The cost of chicken has risen by 75% over the past month, while beef and lamb prices have jumped 68%. Many dairy products have seen price increases of 50%.
Industrial Base Under Siege
Airstrikes have damaged approximately 20,000 factories, representing some 20% of Iran’s production units, according to economist Hadi Kahalzadeh. While Israel claimed to target the industrial base of the paramilitary Revolutionary Guard, the strikes hit numerous facilities not owned by that force.
Affected sites include aluminum and cement factories, chemical developers, and Tofigh Daru, the nation’s largest pharmaceutical holding and a producer of anticancer drugs.
The most severe damage occurred just before the April 8 ceasefire, when strikes targeted the largest petrochemical and steelmaking plants. Production has halted at the two biggest steel producers, Mobarakeh Steel and Khuzestan Steel, and more than 50 petrochemical complexes have shut down.
Economic Ripple Effects
The collapse of the petrochemical and steel sectors has crippled Iran’s two largest non-oil exports. This has led to higher costs for essential materials, including pipes, plastics, fabrics, and packaging for butter, cheese, and milk.
In the city of Kashan, the center of the rugmaking industry, roughly 80% of manufacturers have stopped operations. Domestic sales have dropped to nearly zero, and the price of synthetic fibers has leaped between 30% and 50%.
The construction sector is similarly facing a “massive shock,” with most new building projects on hold and the price of iron sheeting more than doubling. One private construction contractor reported laying off half of its 180 headquarters staff and shutting down a project with Mobarakeh Steel, resulting in 1,000 lost jobs.
Trade Blockades and Social Unrest
The economic crisis is compounded by a U.S. Blockade of Iranian ports, which chokes off oil exports and imports that generate billions of dollars. Iranian strikes on the United Arab Emirates led that country to cut off trade, affecting a nation Iran relied on for about a third of its imports.
Internal stability is also under pressure. The internet has been largely shut down since mass protests in January—triggered by inflation—were met with a bloody crackdown. Experts warn that current economic woes could again push citizens into the streets.
Deputy Labor Minister Gholamhossein Mohammadi stated that at least 1 million jobs have been lost directly due to the war. Hadi Kahalzadeh warns that the ripple effects could put 10 million to 12 million jobs at risk, which constitutes half of Iran’s labor force.
The Global Standoff
Iran is leveraging its control of the Strait of Hormuz as a weapon against the global economy. Leaders have stated they will only reopen the waterway for global energy if the war ends and the U.S. Blockade is lifted.
Iranian officials are betting that an economy designed for self-reliance under decades of sanctions can outlast the administration of U.S. President Donald Trump. While the government has promised to increase unemployment insurance, the social security system is struggling as its funding depends heavily on stakes in the now-crippled petrochemical industry.
Some industrialists believe the economy could bounce back after the war, but this remains conditional. As factory owner Mehdi Bostanchi noted, an optimistic forecast is unlikely if international sanctions are not lifted in future agreements.
Frequently Asked Questions
How many jobs have been lost or put at risk in Iran?
Deputy Labor Minister Gholamhossein Mohammadi reported at least 1 million jobs lost directly because of the war. Economist Hadi Kahalzadeh warns that 10 million to 12 million jobs—half of the labor force—are at risk due to ripple effects.
Which major industries have been most affected by the strikes?
The steel and petrochemical industries were hit hardest, with the shutdown of over 50 petrochemical complexes and the halting of production at Mobarakeh Steel and Khuzestan Steel. Other affected sectors include pharmaceuticals (Tofigh Daru), cement, aluminum, and carpet manufacturing.
What is Iran’s condition for reopening the Strait of Hormuz?
Iranian leaders have stated they will only reopen the key waterway for global energy if the U.S. Blockade is lifted and the war ends.
Do you believe economic resilience can withstand a prolonged blockade in the modern era?
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