Trump says Iran’s economy is ‘collapsing’ — former adviser to Iran’s central bank pushes back
A former adviser to Iran’s central bank challenged President Donald Trump‘s claim that Iran’s economy was collapsing.
Instead, he warned that a decision by the United Arab Emirates to cut trade ties could push Iran’s economic contraction even further.
Mehrdad Sepahvand, now working with Daric Investment Group as Director, made the comments just hours after Trump vowed a new wave of economic pressure on Tehran.
“We should be a little bit cautious about the view that the Iranian economy is simply on the verge of collapse,” he told CNBC, adding, “Shops are still full of food and basic goods and there is no sign of panic buying.”
Instead of focusing on collapse, Sepahvand pointed out that the burden was falling on low-income Iranians and young people, who were dealing with surging prices and vanishing jobs.
“Despite serious imbalances in the banking system and even severe cyberattacks, public confidence in the banking system has not collapsed and we have not seen any major run on banks,” he added. “So the situation around is not as bad as we imagine.”
What Trump said
Sepahvand’s remarks followed a statement from Trump, who vowed economic warfare and isolation on an unprecedented scale against Iran, declaring that the regime was hanging by a thread following the collapse of ceasefire talks.
The pressure campaign, which the Trump administration has run since April under the name Operation Economic Fury, has focused on cutting off what officials describe as the regime’s global terror financing and revenue streams.
Trump also urged allies to stand back from helping Iran in any way, threatening consequences if any country was found supporting Iran.
The numbers behind the dispute
The World Bank estimated that Iran’s gross domestic product contracted by 2.7% in the year ending in March, citing disruption from widespread protests the previous year along with intensified hostilities in the region.
Inflation added another layer of strain on households.
Inflation in Iran surged to 62.2% in February, with food prices climbing at an even steeper rate, as per reports by CNBC.
While those figures painted a picture of an economy under real pressure, they fell short of confirming the total collapse Trump described.
The UAE factor
The Emirates have functioned as one of Iran’s most important trade partners for years, serving as a hub for goods, cash and business activity that Tehran has relied on to soften the impact of Western sanctions.
A decision by the UAE to sever those ties represented a meaningful shift, since it would cut off a channel that Iran has depended on even as other avenues closed.
While the UAE has historically operated somewhat outside the direct reach of U.S. sanctions enforcement, what brought Iran under fire were two Iranian ballistic missiles, allegedly fired at the Gulf state.
Background on the pressure campaign
Tensions between the United States and Iran escalated sharply in 2026, rooted in a conflict that began in late February when the U.S. and Israel launched military action against Iran.
A ceasefire brought a 60-day pause, but it expired on August 17 without a diplomatic resolution.
The U.S. has maintained a naval blockade near the Strait of Hormuz, a critical oil shipping route, driving up global energy prices. Trump has pushed economic pressure through sanctions under Operation Economic Fury, while Iran has accused Washington of economic terrorism.