After three years of disruption and decline following the May 2018 US unilateral withdrawal from the 2015 Iran nuclear deal and the Covid-19 pandemic, the Iranian economy has stabilized. While some macroeconomic indicators—especially inflation—remain a worry, Gross Domestic Product (GDP) has returned to marginal growth, indicating that the economy has remained resilient in the face of massive external and internal pressures.  Experts agree that the diversity of Iran’s economic activity has been a key factor in avoiding far worse economic outcomes.

Mismanagement and the Covid-19 pandemic have both contributed to Iran’s poor economic performance in recent years, but it remains that US sanctions against the country will be the key factor in determining Iran’s future prospects.

Looking ahead, there are three scenarios to consider with reference to the medium term outlook for the  Iranian economy in case of a) a return to the Joint Comprehensive Plan of Action (JCPOA), as the Iran nuclear deal is formally known; b) an interim deal that would partially ease sanctions against the country; and c) a continuation of the current US sanctions regime...