Iran's economy is showing signs of foundering just as the country prepares to inaugurate its first new president in eight years, with Western sanctions cutting ever deeper into the Islamic republic's financial lifelines and increasing pressure for a nuclear deal with the West.
A welter of new data shows accelerated financial hemorrhaging across multiple sectors, from plummeting hard-currency reserves to steadily falling oil exports, Iran's main source of foreign cash. U.S. officials and analysts say the tide of bad news will complicate the task awaiting Hassan Rouhani, the incoming president, but it could also increase Iran's willingness to accept limits that would preclude it from developing nuclear weapons.
Although many Iran experts think that the chances for a bargain remain small, recent warnings about the economy from within the regime suggest that the nation's leaders may be looking for a way out, analysts say.
Iranian officials last month reported an inflation rate of 45 percent — compared with 32 percent earlier in the summer — while also acknowledging that the economy is set to contract for the first time in three decades.
Iran's oil exports, which had declined nearly 40 percent by the end of last year, have taken a further hit in recent weeks as Tehran's remaining Asian customers have cut back on purchases of Iranian crude. And a draft analysis by the economic research firm Roubini Global Economics estimated that Iran's foreign currency holdings are declining at a rate of about $15 billion a year as Tehran is forced to tap into savings to meet its current budget needs.
Worsening matters for Iran, banking sanctions are preventing the government from accessing some of its remaining overseas reserves, said Mark Dubowitz, director of the Foundation for Defense of Democracies, a Washington-based think tank that co-sponsored the Roubini study.
"Iran is in serious trouble," said Dubowitz, a sanctions expert who advised on congressional legislation that authorized some of the harshest measures. Noting that Rouhani won the election in part because of popular discontent over the regime's economic policies, Dubowitz said the "burden now is on Mr. Rouhani to persuade the supreme leader to compromise."