UAE Trade Halt Could Deepen Iran Contraction to 5%, Former Adviser Warns

2 articles · Updated · CNBC · Aug 20

A 5% contraction is now Sepahvand’s estimate for Iran’s economy after the UAE cut all trade and financial ties, a move he said will hit exchange rates, raise import costs and fuel inflation over the next two quarters.
The UAE had been Iran’s largest import source before the war and a key financial gateway, making the rupture more damaging than existing sanctions alone.
Trump escalated pressure hours earlier, vowing “economic warfare and isolation on an unprecedented scale” and warning any country offering Iran a lifeline would face severe consequences.
Iran’s economy was already shrinking—down 2.7% in the year to March—with inflation at 62.2% in February and food prices up 99%, though Sepahvand said there is still no panic buying or bank run.
Sepahvand argued the squeeze is hurting low-income Iranians and young workers most, while also strengthening hardliners and making any U.S.-Iran deal harder to reach.