Iran faces economic slump and unrest as UN sanctions return

Iran's economy is at risk of simultaneous hyperinflation and severe recession, officials and analysts say, as clerical rulers scramble to preserve stability with limited room to manoeuvre after a snapback of UN sanctions.

They followed a breakdown in talks to curb Iran's disputed nuclear activity and its ballistic missile programme.

Diplomacy to resolve the deadlock remains possible, both sides say, though Iranian Supreme Leader Ayatollah Ali Khamenei has rebuffed U.S. President Donald Trump's offer to forge a new deal.

Three senior Iranian officials, speaking on condition of anonymity, said Tehran believes the U.S., its Western allies and Israel are intensifying sanctions to fuel unrest in Iran and jeopardise the very existence of the Islamic Republic.

Since the reimposition of UN sanctions on 28 September, multiple high-level meetings have been held in Tehran on how to avert economic collapse, circumvent sanctions and manage simmering public anger, the officials told Reuters.

Deepening economic disparities between ordinary Iranians and a privileged clerical and security elite, economic mismanagement, galloping inflation - reported even by state media - have fanned discontent.

But analysts warn that such workarounds may not be enough to shield the sprawling country of 92 million people from the renewed economic blow.  

"The impact of the UN sanctions will be severe and multifaceted, deepening the country’s longstanding structural and financial vulnerabilities,” said Umud Shokri, an energy strategist and senior visiting fellow at George Mason University near Washington.  

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