Iran’s economy faces a turbulent path ahead in the aftermath of a 12-day war with Israel, compounding the pressure of longstanding Western sanctions, soaring inflation, and a deeply devalued currency.
The conflict, which began on June 13 with Israeli airstrikes targeting senior military officials and nuclear scientists, escalated when the United States launched its own strikes on Iran’s nuclear facilities. Although a ceasefire was reached on 24 June, the economic fallout is already being felt.
Iran’s projected economic growth has plummeted from 3.5% in 2024 to a forecast of just 0.3% for 2025, according to the International Monetary Fund. Inflation is expected to surge to 43.3% this year, and the Iranian rial continues to weaken sharply, particularly following renewed US sanctions.
Against this backdrop of heightened economic and geopolitical uncertainty, Leasing Life spoke with Mohammad Hadi Moghaei, a key figure in Iran’s leasing industry.
With nine years of experience as Secretary General of both the Iranian Leasing Companies Association and the National Leasing Association of Iran (a post he held until July 2021), Moghaei is now CEO of Razi Leasing Company — a member of the National Leasing Association. He is also an active member of the Money and Capital Market Commission at the Tehran Chamber of Commerce.
Alejandro Gonzalez (AG), the editor of Leasing Life, spoke to Moghaei (MHM) to understand how Iran’s leasing sector is adapting to ongoing economic pressures.
MHM: Before addressing your questions, I’d like to express my gratitude to you, Leasing Life and your editorial team.
The 12-day war came as a shock to many of us. The conditions didn’t seem to point toward imminent conflict, so when it happened, it felt abrupt — almost surreal. It was an imposed situation that none of us had anticipated, and the initial reaction was disbelief, confusion, and concern.
War, no matter where it happens, brings with it both visible destruction and invisible wounds — mental and emotional stress that can deeply affect people and businesses alike.
As someone involved in economic activity, my first thoughts were not only for personal safety but for the sustainability of our business operations and the well-being of our teams.
During those days, many companies temporarily shut down to protect their employees. While evacuations were limited, some residents, especially in Tehran, chose to leave for nearby cities, though most returned after a few days as the situation stabilised. Fortunately, business activity began to resume shortly after the ceasefire, and markets are gradually returning to a state of normalcy.
However, the war has left a lasting impression. Personally, it made me more aware of the types of risks we’ve often overlooked — geopolitical and regional conflict being one of them. It’s clear now that we in the Middle East must expand our risk assessments to include such scenarios.
As business leaders, we need to be more proactive in designing strategies to mitigate these evolving risks. The experience has been a wake-up call — a reminder that resilience today also means preparing for the unthinkable.
MHM: The prevailing sentiment has been one of deep unease — an overall sense that we’ve entered into a situation we neither expected nor desired. The uncertainty surrounding the possibility of war escalating or recurring has created anxiety at every level of the leasing sector.
Employees are naturally worried about job security. Managers are under pressure, concerned about how to adjust business strategies and operations that were carefully planned under entirely different assumptions. Shareholders, meanwhile, are watching market values decline and facing the risk of financial losses. And perhaps most critically for our industry, there is a growing fear around rising default rates, as both individuals and businesses struggle to maintain their financial obligations under such strained conditions. Confidence in the short term is understandably shaken, but there’s a collective effort to adapt and safeguard operations as best as possible.
MHM: While sanctions are often described in terms of the past decade, the truth is that Iran has lived under various forms of sanctions for over 30 years. What we are witnessing now is the cumulative impact of those restrictions, which are becoming more visible and more deeply entrenched over time.
During the sanctions period, leasing companies saw increased demand, particularly for credit-based purchases and rentals. This demand, however, was not as diverse or balanced as we would have liked. It was largely concentrated in consumer goods — such as household appliances, computers, digital products, and personal vehicles — rather than in the types of equipment and infrastructure that small and medium-sized enterprises (SMEs) truly need to grow and thrive.
One major challenge is that Iranian leasing companies are not permitted to provide working capital. Our role is limited to financing high-value assets, meaning SMEs looking for flexible credit lines or operational funding often fall outside our scope. This creates a mismatch between what the sector can offer and what SMEs actually require.
There’s also a broader issue at play. In many countries, SMEs struggle to attract financing unless they already have strong credit histories or substantial collateral. As the old saying goes: “Those who have credit, get credit.” But that leaves us with a critical question — what about those who don’t?
This is where alternative finance models, like crowdfunding and inclusive financial platforms, have started to emerge, both globally and in Iran. I believe leasing companies can and should become instruments of financial inclusion, helping bridge the gap for underbanked businesses.
Unfortunately, the lack of enabling legal frameworks, infrastructure, and public awareness has slowed this progress in Iran.
If we want leasing to play a more transformative role, especially for SMEs, we must invest in building the necessary ecosystem: clear regulations, risk-sharing mechanisms, digital infrastructure, and a shift in how leasing is understood by the market.
MHM: The recent truck drivers’ strikes were relatively short-lived and did not cause significant disruption to business activity. Similarly, the fire at Bandar Abbas port, while concerning, did not occur in the area handling imported consumer goods, so the broader impact on domestic supply chains was limited. [The Iranian authorities said the explosion was caused by “hazardous goods and chemical materials” stored in the port]. That said, the incident did briefly affect the internal transit of goods within the country.
However, I would like to address another deeper point that is hidden in your question — the limited role leasing companies currently play in Iran’s transport and logistics sectors. The share of leasing contracts used to finance equipment for ports, road freight, and rail transport is minimal. In some segments, like rail, leasing plays virtually no role at all.
This is largely because Iran’s asset financing model remains heavily bank-centric. Banks provide loans for large-scale transportation assets, but typically only for a small portion of the purchase price. Leasing companies, constrained by their limited access to capital and relatively low market penetration in fixed asset finance, are unable to compete in this space effectively.
As a result, disruptions in the transport and logistics sectors — while important to the economy as a whole — have little direct impact on the leasing industry. The exposure is minimal simply because leasing hasn’t yet been integrated meaningfully into the financing of infrastructure or heavy transportation assets.
To change this, Iran would need a more diversified and supportive financial ecosystem — one where leasing can complement bank financing, particularly in capital-intensive sectors like transport and logistics.
MHM: Iranian leasing companies face limited direct exposure to currency risk, primarily because sanctions have severely restricted their ability to engage in cross-border leasing or hold foreign currency assets and liabilities. Regulatory constraints further prevent them from importing equipment to meet customer demand.
That said, there’s an important missed opportunity: if leasing companies were allowed to import machinery or equipment, they could potentially benefit from inflation and currency devaluation by offering credit-based sales or rentals, generating strong returns on financed assets. But under current conditions, their role remains domestically confined, and thus only indirectly affected by exchange rate volatility.
MHM: Business continuity is inversely related to uncertainty — the more unpredictable the environment, the harder it becomes to plan or sustain operations. In Iran, the only real constant in recent years has been rising inflation and a weakening currency.
In this climate, leasing companies are adapting by prioritising short-term contracts, liquid assets, and low-risk clients backed by strong collateral. However, this risk-averse approach often clashes with customer behaviour: in uncertain economies, clients seek capital assets, longer-term agreements, and often avoid providing substantial collateral. This creates a difficult balancing act.
Interestingly, demand for certain assets — like cars — has increased, not for usage but as a hedge against inflation. Customers are turning to leasing as a way to preserve the value of their money, expecting that the market value of the asset will exceed its book value even after depreciation. This is in contrast to non-inflationary economies, where leasing is primarily used for cash flow management and operational efficiency.
Another challenge is the lack of contract diversity in Iran. Currently, most leasing contracts follow a lease-to-own model, where ownership transfers to the lessee at the end. In an inflationary environment, this model benefits the lessee, while operating leases — which leave the asset with the lessor — are more advantageous to leasing companies. Yet, such options are limited by regulation.
To build resilience, greater alignment with the Central Bank is essential. This means creating flexibility in contract types, pricing structures, asset categories, and delivery mechanisms. The leasing industry needs regulatory support that reflects market realities and allows it to adapt to shifting demand.
MHM: This is a very important question, but before diving into the state of digital transformation in Iran’s leasing industry, I want to briefly reflect on something that had a strong personal impact on me.
In July 2022, Bill F. Stephenson, now CEO of PEAC Solutions and formerly CEO of DLL, spoke about his desire to create one of the world’s largest independent asset finance providers. Stephenson was clear — the future of leasing lies in moving away from dependence on banks and toward a model focused on the asset lifecycle, value-added services, and pay-per-use. That message sparked something in me.
It made me realise that digital transformation isn’t just about automating existing processes — it’s about rethinking the entire business model. And if Stephenson was embracing this shift at 70, I told myself I could do the same at 60, my current age.
In Iran, digital transformation has so far been limited. Most efforts have focused on process digitisation — online forms, faster onboarding, small-ticket consumer financing. Banks led the way, and leasing companies followed, but only in areas like household goods and electronics. Sectors like vehicles, machinery, and industrial equipment have seen limited innovation.
That’s now beginning to change. Personally, I’ve started building a platform to support digital leasing in these more complex areas — one that connects lessors, customers, and sellers in a scalable, efficient ecosystem. Our goal is to create not just a digital process, but a digitally enabled leasing model that supports long-term asset use, customer value, and financial inclusion.
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“Resilience under pressure: Iran’s leasing sector faces war, sanctions, and inflation” was originally created and published by Leasing Life, a GlobalData owned brand.
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