CAIRO (AP) — Manufacturing has come to a near standstill in the heart of Iran’s famous carpet-making industry. Dairy manufacturers are having trouble finding packaging for milk and butter. The giant steel mill that once drove Iran’s economy has gone silent. Hundreds of thousands of people lost their jobs; millions more At risk.
Shelling for over 5 weeksStrikes in the US and Israel hit thousands of factories. The damage is reverberating throughout Iran’s economy, threatening to cause a wave of layoffs even as Iranians face soaring prices. Chicken prices rose 75% last month, while beef and lamb prices rose 68%. Many dairy products are now half price.
Like in the US, it could get even worse. blockade iranian portsblocking many imports and oil exports that bring in billions of dollars. caused by economic hardship Massive protests suppressed It could push Iranians into the streets again before the war.
Yet Iran has taken control of the global economy and is turning its unique weapons against the global economy. Strait of Hormuz. Iranian leaders say they will only reopen vital waterways for global energy If the blockade is lifted and the war ends. They are betting that an economy built to self-support under decades of international sanctions can withstand the pain longer than the U.S. president. donald trump.
According to state media, Deputy Labor Minister Gholamhossein Mohammadi said Iran had lost at least 1 million jobs directly as a result of the war.
But the ripple effect would put at risk the jobs of around 10 million to 12 million people, half of Iran’s workforce, warned Iranian economist Hadi Kaharzadeh.
Steel and petrochemical production paralyzed
Israel claimed it had attacked the industrial infrastructure of Iran’s paramilitary Revolutionary Guards. But the attack went far beyond that, hitting facilities not owned by the military.
According to Kaharzadeh, a researcher at Brandeis University, the airstrikes damaged 20,000 factories, or about 20% of the country’s production base. The damaged facilities included Tofi Dar, Iran’s largest pharmaceutical company, which produces anti-cancer drugs and other products. Optical equipment and chemical development companies, as well as aluminum and cement factories, were also damaged.
Perhaps most damagingly, Israel attacked Iran’s largest steel mill and petrochemical plant in a series of attacks, most of them at the last minute. Armistice on April 8th. Two major steel producers, Mobarake Steel and Khuzestan Steel, as well as smaller factories, have suspended production. According to Iran’s semi-official Jamalan news agency, more than 50 petrochemical complexes have been shut down.
This has crippled Iran’s two major non-oil exports, and soaring prices have affected everything from plastics to pipes to textiles and packaging for food products such as milk, butter and cheese.
Strikes are not the only cause of the economic crisis. The internet has been largely shut down since the protests, hurting small businesses that rely on online sales. Even before the U.S. economic blockade, Iran attacked the United Arab Emirates, on which it depended for about a third of its imports, and the country was cut off from trade.
ripple effect
According to the son of a carpet maker, about 80% of rug and carpet manufacturers have ceased operations in the industrial zone of Kashan, the center of Iran’s rug manufacturing industry. Her family’s factory, which employed 20 to 30 people and machine-made hundreds of rugs a month, was among those that have closed, but her father still visits the facility every day.
“This is the first time I’ve heard my father so distraught,” said his son, who lives in the United States and spoke on condition of anonymity for the safety of his family.
He said the city of Kashan, which is home to hundreds of carpet manufacturers, “depends on the rug industry, which unfortunately is dysfunctional.” After the war began, exports plummeted, and domestic sales fell to almost zero. Prices for synthetic fibers have shot up 30% to 50%, partly due to downstream effects from the hit to petrochemical facilities, he said.
Mehdi Bostanchi owns a ventilation and air conditioning factory and a second factory producing household fans, with a total of over 1,130 employees. Both are still working. However, HVAC factories are heavily dependent on the construction industry, and “the construction industry is facing a huge shock,” he said.
Most new construction has been put on hold, and the price of shingles has more than doubled.
Bostanchi, a member of the council representing Iranian businessmen, said: “All industries in this country depend in one way or another on our petrochemical industry.” Even companies that do not directly need steel products or petrochemical products have contracts with companies that do.
A chemical engineer working for one of Iran’s largest private construction contractors said he was forced to lay off half of his 180 head office staff and halt a project with Mobarakeh Steel, costing 1,000 jobs.
The Tehran resident quit his job as a consulting engineer just before the war, but his planned new job is currently unclear.
“I belong to the top 1% (of society) and I don’t have a job. I’m very worried about my future,” he said, adding that people’s savings would start to run out in the coming weeks.
Both he and the chemical engineer spoke on condition of anonymity due to safety concerns.
Projection of resilience
Protests in January brought millions to the streets, but worsening inflation led to calls for an end to the Islamic republic and a bloody crackdown.
Officials are trying to reassure the public that Iran can withstand economic pain. The government has promised to increase unemployment insurance. But the burden on Iran’s social security system, which relies heavily on Iran’s interests in petrochemical companies and other key industries, is increasing even as funding dries up, Kaharzadeh said.
The US economic blockade threatens to cut off export revenues. Iran generated approximately $98 billion in exports in 2025, with oil accounting for just under half of that.
However, a complete lockdown is difficult. About half of Iran’s non-oil trade goes by land or through Caspian Sea ports, said economic expert Esfandyar Batmanghelji.
Batmanghelidzi also wrote for the Stock Exchange Bazaar Foundation, a research group that focuses on economic development in West and Central Asia, that Iran has built up great resilience and “preparedness for worst-case scenarios.”
Iran has large stockpiles of critical supplies. He added that Iran has nearly eight months’ worth of electrical machinery, almost six months’ worth of cement, and four months’ worth of steel and iron at the end of 2025, and that rationing could further expand supplies.
Bostanci, the factory owner, said he believed Iran’s economy could recover once the war ended. But how much of that will be depends on whether Iran can win the lifting of international sanctions.
“If any deal fails to lift sanctions, then no, the optimistic predictions will not come true,” he said.
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El Deeb reported from Beirut.
