Foreign investment in Iran hits zero after war

Foreign investment in Iran has effectively come to a halt following the war with Israel and the United States, with no new foreign investment recorded so far this Iranian year, a senior industry ministry figure said.


No foreign investment has been made so far in the current Iranian calendar year, which began on March 21, Tahmoures Lahouti, Deputy Industry Minister and head of Iran’s Small Industries and Industrial Parks Organization, told the Iranian Labor News Agency (ILNA).

“Given the sanctions and restrictions in place, foreign investment is not taking place,” Lahouti said.

Domestic investment in industrial development has also declined compared with last year, with exchange-rate volatility, inflation and weakening household purchasing power weighing on businesses, Lahouti added.

The Iranian year began about three weeks after Israel and the United States launched military operations against the Islamic Republic on February 28.

Lahouti did not provide figures for the decline in domestic investment or specify whether his assessment of foreign investment covered all sectors of the Iranian economy.

The rial has lost roughly 60% of its value against the US dollar since the beginning of the Iranian year, increasing the cost of imported equipment and other inputs for businesses. High inflation and uncertainty over future prices have further complicated long-term investment decisions.

Industrial employment declines

The deterioration in investment has coincided with significant job losses in industry.

About 630,000 industrial jobs were lost in the first quarter of the current Iranian year compared with the same period a year earlier, according to figures from Iran’s Statistical Center.

Separate labor-market data have also shown a sharp decline in the number of workers making social-security contributions.

The contraction adds to longer-running problems facing Iranian manufacturers, including sanctions, restrictions on international banking, inflation, currency depreciation and recurring energy shortages.

Foreign investment falls as capital outflows surge

Data from the United Nations Conference on Trade and Development (UNCTAD)shows that Iran was already struggling to attract foreign direct investment well before the war.

In 2016 and 2017, following the implementation of the nuclear deal and the temporary easing of international restrictions, Iran attracted an average of about $4.2 billion in foreign direct investment (FDI) annually. After the United States withdrew from the nuclear deal and reimposed sanctions in 2018, the trend reversed, with annual FDI subsequently falling to around $1.5 billion.

At the same time, Central Bank data point to a sharp increase in capital outflows. Iran’s capital-account deficit widened from $6.77 billion in 2017 to $19.62 billion in 2025, nearly tripling over the period.

Overall, Iran attracted about $12.7 billion in foreign direct investment between 2018 and the end of 2025, while cumulative capital-account deficits approached $120 billion over the same period.

The gap illustrates that Iran’s problem extends beyond its difficulty attracting foreign capital. The country is also recording substantial capital outflows.

Iran falls further behind regional rivals

UNCTAD data for 2025 show the scale of the investment gap between Iran and some of its regional competitors.

Saudi Arabia attracted $32.6 billion in foreign direct investment last year, while the United Arab Emirates received about $48.2 billion.

The figures underscore Iran’s difficulty competing for foreign capital after years of sanctions and restrictions on international banking and trade.

Lahouti’s comments show that those constraints have now choked off an already limited flow of foreign investment. At the same time, depreciation of the rial, inflation, economic uncertainty and persistent capital outflows have made it more difficult for domestic investors to fill the gap.


Foreign investment falling to zero this year is therefore part of a longer trend. Iran was struggling to attract foreign capital well before the latest war, while substantial capital outflows added to the pressure on investment at home.




https://www.iranintl.com/en/202609135404