Central bank institute: 5.9% contraction and the role of the US naval blockade

The Monetary and Banking Research Institute, the research arm of the Islamic Republic's central bank, has estimated Iran's economic growth in the three months to 22 August 2026 at minus 5.9 percent, and has named the return of the US naval blockade in mid-July as one of the most important factors prolonging the slump. The estimate appears in a report titled "Nowcasting the Activity Index of Different Sectors of Iran's Economy".

According to the report, economic growth in the month to 22 July was minus 5.6 percent, and the slump has stayed at around minus five percent for the second consecutive period since the war. In spring, Iran's economic growth had fallen to minus 12.1 percent. The institute attributed the 0.3 percentage-point fall in gross domestic product in the month to 22 August mainly to the oil sector.

Oil sector collapses under blockade pressure

The oil sector's activity index for this period is estimated at minus 27.4 percent, compared with minus 17.6 percent in spring. Limits on oil exports are cited as the main cause of the fall. Data from the US Energy Information Administration and OPEC also show that Iran's crude oil production in the month to late August was 35 to 36 percent lower than in the same period last year.

The tanker-tracking firm Vortexa has said the Islamic Republic's seaborne crude exports fell to zero in early September, while the 14-day average before that was about 230,000 barrels a day. Brad Cooper, commander of US Central Command, had said earlier that the naval blockade has stopped at least $25 billion of the Islamic Republic's oil from being exported.

Industry, services and the housing market

The institute estimates that industry and mining contracted by eight percent in this period and services by 3.7 percent. Only agriculture was positive, growing six percent, which the report attributes to an increase of more than 60 percent in rainfall in the water year to 22 September.

Bank transaction data shows the nominal value of retail and wholesale purchases and sales rose 102 percent, but the number of transactions stayed almost flat, a sign of the effect of inflation, not of a boom. The number of real estate transactions also fell 45 percent. Over the same period, the rial has lost nearly 35 percent of its value against the dollar on the open market since late June.

Admission versus denial

The estimate comes as Abdolnaser Hemmati, head of the Islamic Republic's central bank, called talk of Iran's economic collapse a "delusion" at an International Monetary Fund meeting a few days ago. Now the research arm of the same bank speaks of a deep, consecutive slump, whose burden Iranian households carry in the form of soaring prices and unemployment.

The research arm of the Islamic Republic's central bank admitted that Iran's oil sector has shrunk by more than 27 percent under the naval blockade.