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Economic Shocks and the Erosion of the Middle Class in Iran

The middle class in Iran is witnessing an increasing struggle due to economic shocks. Currently, nine out of ten social segments in Iran are susceptible to these shocks. A careful examination of spending patterns across these segments reveals a remarkably wide gap between the tenth segment and the others.
Data on urban household spending for 2022 shows that the spending between the tenth segment (the top 10% of the population) and the ninth segment is approximately double. However, the spending gap between the other segments is much smaller, deepening the disparity between the tenth segment and the rest of society. This means that most segments are considered vulnerable to economic shocks, and even some households in the tenth segment may become threatened by new economic fluctuations.
As a result, it can be said that only a small portion of the community is insulated from economic shocks. The vulnerability of 9 out of 10 segments means that many households could easily fall near the poverty line. Although the tenth segment may seem insulated from these fluctuations, a deeper look reveals a significant income gap even within this segment. Therefore, new economic disruptions could push households at the lower ranks of the tenth segment down to lower segments.
In 2023, the average urban household spending in the tenth segment was around 589 million tomans, while in the ninth segment it was approximately 316 million tomans. This means that the spending of the ninth segment represents about 53% of the spending of the tenth segment, making the spending of the tenth segment nearly double that of the ninth segment.
This significant difference highlights the clear disparity in living standards and economic power. In 2022, this ratio was 59%, illustrating the widening gap between these segments. Households in the tenth segment spend much more than the lower segments, especially on non-food items such as housing, education, healthcare, and entertainment.
Last year, the average spending on food and tobacco for urban households in the tenth segment was about 95 million tomans, while an additional 494 million tomans were spent on non-food goods. In other words, only 16% of the expenses of high-income Iranian households are allocated for food needs.
In contrast, the percentage of spending on food in the ninth segment rises to about 22% of total costs, and this percentage increases in lower segments. For example, in 2023, the total average spending for urban households in the first segment was around 47 million tomans, with about 43% of this amount allocated for food needs.
Over the past years, the Iranian economy has faced numerous shocks, including sanctions and currency fluctuations. During these periods of economic turmoil, such as rising inflation or financial crises, the lower segments are affected more severely. Data related to annual urban household spending shows that the first and second segments, which have much lower annual expenditures compared to the tenth segment, spend most of their income on food.
This means that when food or essential good prices rise, low-income households are more affected and have greater difficulty adapting to these changes. In contrast, households in the tenth segment, which allocate a large part of their spending to non-essential goods and services such as entertainment, healthcare, and education, are less impacted by rising prices of essential goods and can adjust their spending in other areas.
The economic gap between the tenth segment and the ninth segment indicates increasing economic inequality in Iran. This disparity is not solely due to differences in income, but also to gaps in access to economic opportunities, educational services, healthcare, and housing. The financial power of the tenth segment gives this group greater access to high-quality services, making them less susceptible to economic crises and rising prices, while the lower segments are more at risk due to their limited income. The widening of these gaps over time exacerbates social and economic challenges.
Currently, it can be said that the middle class in Iran has significantly weakened, and that nine out of ten income segments are exposed to fluctuations and economic shocks. Although the tenth segment may seem capable of maintaining its standard of living despite economic changes, deeper analysis reveals a significant income gap even within this segment. This means that new economic disruptions may push some households in the lower ranks of the tenth segment down to lower segments. Furthermore, the poverty gap has widened in recent years.
New economic shocks could push some individuals who are not currently classified as poor below the poverty line. Economic inequality can have long-term negative effects on social stability and national unity, especially when large segments of society feel left behind by economic cycles and unable to benefit from growth opportunities. Given the significant gap between the tenth segment and even the eighth and ninth segments, only the highest income group may be able to maintain their previous living standards.
In recent years, with rising inflation, the government has tried to support low-income segments through various types of aid to prevent the widening of the wealth gap. However, these policies have not sufficiently reduced class disparity. Low-income households still spend a large portion of their income on basic needs and have limited ability to save or invest.
Despite the benefits that the tenth segment enjoys, the economic gap may lead to long-term social discontent and economic
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BENEFIT AGM approves 10%...
- March 27, 2025
BENEFIT, the Kingdom’s innovator and leading company in Fintech and electronic financial transactions service, held its Annual General Meeting (AGM) at the company’s headquarters in the Seef District.
During the meeting, shareholders approved all items listed on the agenda, including the ratification of the minutes of the previous AGM held on 26 March 2024. The session reviewed and approved the Board’s Annual Report on the company’s activities and financial performance for the fiscal year ended 31 December 2024, and the shareholders expressed their satisfaction with the company’s operational and financial results during the reporting period.
The meeting also reviewed the Independent External Auditor’s Report on the company’s consolidated financial statements for the year ended 31 December 2024. Subsequently, the shareholders approved the audited financial statements for the fiscal year. Based on the Board’s recommendation, the shareholders approved the distribution of a cash dividend equivalent to 10% of the paid-up share capital.
Furthermore, the shareholders endorsed the allocation of a total amount of BD 172,500 as remuneration to the members of the Board for the year ended 31 December 2024, subject to prior clearance by related authorities.
The extension of the current composition of the Board was approved, which includes ten members and one CBB observer, for a further six-month term, expiring in September 2025, pending no objection from the CBB.
The meeting reviewed and approved the Corporate Governance Report for 2024, which affirmed the company’s full compliance with the corporate governance directives issued by the CBB and other applicable regulatory frameworks. The AGM absolved the Board Members of liability for any of their actions during the year ending on 31st December 2024, in accordance with the Commercial Companies Law.
In alignment with regulatory requirements, the session approved the reappointment of Ernst & Young (EY) as the company’s External Auditors for the fiscal year 2025, covering both the parent company and its subsidiaries—Sinnad and Bahrain FinTech Bay. The Board was authorised to determine the external auditors’ professional fees, subject to approval from the CBB, and the meeting concluded with a discussion of any additional issues as per Article (207) of the Commercial Companies Law.
Speaking on the company’s performance, Mr. Mohamed Al Bastaki, Chairman BENEFIT , stated: “In terms of the financial results for 2024, I am pleased to say that the year gone by has also been proved to be a success in delivering tangible results. Growth rate for 2024 was 19 per cent. Revenue for the year was BD 17 M (US$ 45.3 Million) and net profit was 2 Million ($ 5.3 Million).
Mr. Al Bastaki also announced that the Board had formally adopted a new three-year strategic roadmap to commence in 2025. The strategy encompasses a phased international expansion, optimisation of internal operations, enhanced revenue diversification, long-term sustainability initiatives, and the advancement of innovation and digital transformation initiatives across all service lines.
“I extend my sincere appreciation to the CBB for its continued support of BENEFIT and its pivotal role in fostering a stable and progressive regulatory environment for the Kingdom’s banking and financial sector—an environment that has significantly reinforced Bahrain’s standing as a leading financial hub in the region,” said Mr. Al Bastaki. “I would also like to thank our partner banks and valued customers for their trust, and our shareholders for their ongoing encouragement. The achievements of 2024 set a strong precedent, and I am confident they will serve as a foundation for yet another successful and impactful year ahead.”
Chief Executive of BENEFIT; Mr. Abdulwahed AlJanahi commented, “The year 2024 represented another pivotal chapter in BENEFIT ’s evolution. We achieved substantial progress in advancing our digital strategy across multiple sectors, while reinforcing our long-term commitment to the development of Bahrain’s financial services and payments landscape. Throughout the year, we remained firmly aligned with our objective of delivering measurable value to our shareholders, strategic partners, and customers. At the same time, we continued to play an active role in enabling Bahrain’s digital economy by introducing innovative solutions and service enhancements that directly address market needs and future opportunities.”
Mr. AlJanahi affirmed that BENEFIT has successfully developed a robust and well-integrated payment network that connects individuals and businesses across Bahrain, accelerating the adoption of emerging technologies in the banking and financial services sector and reinforcing Bahrain’s position as a growing fintech hub, and added, “Our achievements of the past year reflect a long-term vision to establish a resilient electronic payment infrastructure that supports the Kingdom’s digital economy. Key developments in 2024 included the implementation of central authentication for open banking via BENEFIT Pay”
Mr. AlJanahi concluded by thanking the Board for its strategic direction, the company’s staff for their continued dedication, and the Central Bank of Bahrain, member banks, and shareholders for their valuable partnership and confidence in the company’s long-term vision.
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