Economic destruction and imbalances in post-revolutionary Iran

The post-revolutionary Iranian economy has experienced significant turbulence and decline; it needs considerable injections of money and material to return to normal and then start to grow again. Among the constraining factors, fluctuations in oil revenue, impact of the war and the earthquake, the government’s erratic economic policies, and the fractured domestic politics have been the most destructive to the economy. This chapter begins with an analysis of the war destruction which also had far-reaching implications for the oil sector and its revenue. It reports a preliminary assessment of the damage wrecked on the economy by the earthquake, and focuses on eight sets of imbalances from which the economy suffers the most and explains their complex and interrelated causes. However, in the war environment and in a dependent economy facing foreign currency shortage, the supply-demand imbalance led to a chronic shortage of most commodities, resulting in hyperinflation.