Iran’s small businesses collapse under war, inflation and internet blackout
Prices for some goods have tripled or quadrupled within a matter of months. At least two million people have lost their jobs, the currency has lost 60% of its value, the international internet has been shut down for more than 75 days, and there is no end in sight. This is the reality of Iran’s economy after two and a half months of war, ceasefire and blockade. We spoke to the owner of an e-shop, a small business, and a major tech startup to capture what life is like for Iranians today.
Issued on: 14/05/2026 - 18:44
6 min Reading time Share By: Ershad ALIJANI
Even before the war, Iran’s economy had been spiralling for years under international sanctions tied to the regime’s nuclear activities, alongside deep corruption and chronic mismanagement, making daily life increasingly difficult for millions.
Over the past decade, Iranians have staged several large local and nationwide protests triggered by economic grievances, including in 2019 and January 2026, leaving tens of thousands of protesters dead, arrested or injured.
Since April 28, when the US and Israel attacked Iran and the Iranian regime shut down the internet, the economy has worsened sharply.
Middle-class Iranians we spoke to said the situation was becoming unsustainable, and that they feared they may no longer be able to afford food in the coming months if the situation continues.
'We are all just trying to buy food and keep a roof over our heads'
Sarina (not her real name) owns a small e-shop selling artefacts and handicrafts. Based in Tehran, her business has been suffering since January when the Iranian regime shut down the internet amid the massive anti-regime protests.
I have an e-shop, so everything happens online. We order, we buy, we sell online. Everything depends on the internet, especially Instagram, which is our shop window. Since January, we have just been losing money.
Before this, we had between 100 and 150 million tomans in turnover each month [€660 - €1,000, based on the exchange rate in January 2026]. For the past four months, it has been zero.
Most of the manufacturers we collaborate with are shutting down because they have no orders, and I think we are going to shut down in the coming days too. We have no orders, and every single day means more costs for me. I am heavily in debt.
It is not only the internet shutdown causing this crisis: it is the economy in general. If the government restores the internet connection right now, I don’t think it will change much.
People have no money to buy things. We are all just trying to buy food and keep a roof over our heads. Clothes, handicrafts and art have become luxury items.
Our Observer’s account is consistent with figures released by the Iranian authorities. Since the outbreak of the war on April 28 and the subsequent internet blackout imposed by the Iranian regime, more than 1 million jobs have been eliminated and more than 2 million people have lost their source of income, Deputy Work Minister Gholamhossein Mohammadi said in an interview on April 19.
Independent experts, however, have reported even more alarming figures. Several Iranian experts estimate that more than 20 million Iranians – more than one in four people – earn their living through the internet, and that the internet shutdown is costing around $80 million a day.
'There will be another huge protest caused by hunger'
Saman (not his real name) is the CEO of a small, growing B2B startup in Iran.
We are a service-based small startup. We had 28 employees and had to lay off 25 of them because we lost our customers, and paying their salaries cost us a lot. I check on them regularly, though.
Unfortunately, 12 of them are still unemployed, and the rest have found new jobs where the salary is not enough, so when they finish their first job, they start working as delivery drivers or Snapp! drivers [Iran’s equivalent of Uber]. And I am talking about well-educated people, engineers and university graduates.
The private sector is dead. The only orders we still have are from the public sector. There are lots of orders, but they don’t have money to pay. So we provide the service, but it takes months to get paid, if they pay at all.
On the other hand, constantly rising prices are a huge issue. I had to buy an essential supply for 1 million tomans [€4.70] just a few weeks ago. Now I have to pay 1.5 million [€7.10], if I can even find someone willing to sell it, because suppliers are not sure that if they sell to me, they will be able to refill their stock at the same price and not lose money.
Iran’s currency has lost more than 60 percent of its value in just six months, creating chaos for importers. Many say selling their products has become too risky because the money they earn in tomans may no longer be enough to buy the same products again once converted into foreign currency. Iran’s currency, known as the rial internationally, has become the least valuable currency in the world.
Saman continues:
I have this strong feeling that if we don’t get out of this limbo very soon, there will be another huge protest caused by hunger. Everyone I know around me is using their savings to eat and pay the bills. These savings are not endless, and there are millions who have no more savings, or never had any at all. I have no children, but if you are a father or mother and cannot feed your child, you’re ready to burn down the entire world.
In January 2026, Iran saw its largest-ever anti-regime protests driven by economic grievances. In just two days, the Iranian regime killed more than 35,000 protesters, according to human rights organisations.
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Rima, a retired woman, explains how expensive food has become in a country where the minimum monthly wage is around 16,000,000 tomans – or €76, at the time of publication:
I am retired and live alone. My pension is 15 million tomans [€71].
A small chicken costs 900,000 tomans [€4.20], 32 eggs cost 600,000 tomans [€2.85], red meat is around 1.5 million tomans [€7.10], and a small basket of fruit and vegetables costs more than 2 million tomans [€9.50]. So if my son and daughter don’t help me every month, I cannot survive.
According to official statistics, rice prices have increased by more than 300 percent, oil by more than 400 percent, chicken and meat by between 170 and 220 percent, and food prices overall by around 200 percent in the last 19 months.
'One in five jobs in Iran’s cyberspace will disappear'
Ramak (not his real name) is a manager in a tech startup in Iran with tens of millions of users.
The situation for major startups in Iran is very confusing and contradictory. On one hand, because the international internet is shut down, all these tiny e-shops and businesses that used to work on Instagram have turned to internal platforms such as Divar [Iran’s equivalent of eBay], Digikala [Iran’s Amazon] and Torob [Iran’s Google Shopping] or Snapp! [Iran’s Uber]. So these platforms have even more users.
But on the other hand, because the domestic economy is in a crippling crisis and people have no money to spend, there are far fewer transactions and less profit for the big startups. So they are firing people.
Our forecast is that at least one in five jobs in Iran’s cyberspace will disappear in the coming weeks, if not the coming days.
The war has also come at a time when major Iranian startups are using AI extensively. A few weeks ago, Digikala laid off more than 2,000 employees, because almost all of them were replaced by AI.
According to the Iran Cyber Commerce Union, Iranian startups have lost between 25 and 70 percent of their revenue since the war started, depending on their sector.
According to Iran’s Welfare Organisation, even before the Israel-US war on Iran, more than 34 million Iranians were living below the absolute poverty line, while experts say the country’s middle class has been falling into poverty even faster since the war began.
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