What was the state of Iran’s economy in March 2024 as the country celebrated the Persian New Year? What were the biggest economic challenges?

Sanctions have cast a long shadow on Iran’s economy, but they have not led to an economic collapse. Iran has managed to grow its overall economy by an average of 1.7 percent since the initial 2012 sanctions shock. But for ordinary Iranians, the government’s ability to “resist” sanctions for more than a decade represents a Pyrrhic victory.

Iranian hardliners consolidated their grip on power in the March 1 election for Parliament and the Assembly of Experts. The 290 seats of Parliament are elected every four years. Elected every eight years, the 88-member assembly has been charged with selecting and overseeing the supreme leader. 

U.S. forces deployed across the Middle East were attacked more than 160 times by pro-Iranian militias during the first four months of the Gaza war—from October 2023 to February 2024—between Israel and Hamas. They faced barrages of drone, rocket, and missile strikes on their positions in Iraq, Syria, Jordan and the Red Sea. A major turning point was the drone strike that killed three Americans and wounded 34 at a U.S. base in Jordan near the borders abutting Syria and Iraq. In response, U.S.

Tensions soared between the Houthi militia in Yemen and the United States after Houthis seized the crew of a commercial shipping vessel on Nov. 19, 2023. Houthis launched attacks–using drones, missiles, and small boats–on commercial shipping and naval warships in the Red Sea, one of the world’s most important waterways for international commerce.

What are Iran’s political challenges in 2024?

The main challenges for the government are maintaining political stability and stabilizing the dire economic situation, especially the very high inflation rate. Officials understand that the legitimacy of the regime has eroded, especially since the brutal crackdown on nationwide demonstrations sparked by the death of Mahsa Amini in police custody in 2022. The government wants to avoid any flashpoints that could push Iranians to take to the streets again.

Since the early 21st century, the centerpiece of relations between Tehran and Beijing has been economic, largely based on trade in oil and consumer goods. China bought Iran’s oil to fuel industrialization, while it sold machinery, electronics, and appliances to Iran to expand its global marketplace. The relationship, however, has been lopsided.  

Iran reported its first deaths from the new COVID-19 virus on February 19, 2020. It soon became one of the world’s early epicenters. The Health Ministry claimed that the disease had been spread by travelers between Iran’s holy city of Qom and China’s industrial center at Wuhan, where the coronavirus first broke out. The government initially rejected quarantines, which the Deputy Health Minister Iraj Harirchi said "belong to pre-WWI — to the plague, cholera, stuff like that."

On November 27, Mohsen Fakhrizadeh, a prominent nuclear scientist, was assassinated in a roadside attack about 40 miles east of Tehran. Western and Israeli intelligence had long suspected that Fakhrizadeh was the father of Iran’s covert nuclear weapons program. He was often compared to J. Robert Oppenheimer, the father of the American atomic bomb. He kept a low profile for most of his career.

Tensions between Iran and the outside world have escalated since an attack on four tankers on May 12 near the Strait of Hormuz, which was followed by an attack on two more tankers on June 13. Both attacks occurred in the Gulf of Oman. The Persian Gulf flows through the Strait of Hormuz into the Gulf of Oman. On July 4, the British Royal Navy seized an Iranian tanker carrying oil to Syria. In what seemed like a response, Iranian vessels harassed a British tanker while entering the Strait of Hormuz on July 11.

Donald Trump’s election produced dramatic change in U.S. policy in 2017. As a candidate, he had blasted the 2015 nuclear agreement between Iran and six world powers as “the worst deal ever negotiated.” If elected, Trump said his number-one priority would be to dismantle the deal.