TEHRAN (Iran News) The PMI, a key indicator of business conditions, highlights a broad decline across most of its components. Production levels, new customer orders, order delivery speed, and raw material inventories all contracted in Bahman, though employment showed a modest uptick—the highest in four months. Despite this, the overall trend points to a sluggish economy grappling with multiple challenges.

The industrial sector PMI, adjusted seasonally, dropped to 46.7 in Bahman, down sharply from 52.8 in Dey (December–January), marking its lowest level in seven months. Production in the sector fell to 47.3, continuing a downward trend for the sixth time this year. Contributing factors include severe energy shortages, with power and gas outages disrupting operations, alongside weak demand and soaring input costs driven by a sharp rise in exchange rates.

New orders in the industrial sector also hit a seven-month low, reflecting weakened consumer confidence amid economic uncertainty. Rising costs, fueled by currency fluctuations and sanctions-related pressures, have dampened demand, even as the year-end typically sees a seasonal uptick. Foreign sales and exports have similarly declined, further exacerbating the drop in orders.

The cost of raw materials and purchased supplies reached a 22-month high in Bahman—the steepest increase since Farvardin 1402 (March–April 2023). Imported materials, heavily impacted by exchange rate volatility, have driven up production costs, forcing businesses to raise prices. The PMI sub-index for output prices hit its highest level in 34 months, since Ordibehesht 1401 (April–May 2022). However, with consumer purchasing power eroded by inflation, demand remains subdued, squeezing company profit margins and pushing many firms toward closure.

Energy shortages have compounded these woes, halting production processes and forcing businesses to rely more heavily on dwindling warehouse stocks. Raw material inventories also declined at a faster pace in Bahman, as supply chain disruptions—stemming from currency allocation issues and limited availability—hindered restocking efforts.

While most indicators pointed downward, hiring activity offered a rare bright spot. The employment sub-index rose in Bahman, reaching its highest level in four months across the broader economy. However, this gain was overshadowed in the industrial sector, where employment contracted. Businesses, facing financial strain from rising costs and energy constraints, have scaled back production capacity and reduced hiring. Meanwhile, workers are increasingly reluctant to join manufacturing firms, as wages fail to keep pace with soaring living costs.

The PMI report paints a bleak picture of Iran’s economic trajectory. Persistent energy shortages, intensified sanctions, and currency depreciation have created a perfect storm for businesses. Foreign exchange pressures, driven by reduced oil revenues and heightened demand for dollars to settle export commitments, have triggered sharp currency fluctuations, further inflating import costs.

Despite the approach of the Persian New Year, when demand typically rises, new orders fell, signaling a lack of confidence among consumers and businesses alike. Analysts warn that without significant policy interventions—such as stabilizing the currency or addressing energy deficits—the recession could deepen in the coming months. Inflation is expected to climb further as production costs continue their upward spiral, potentially pushing more companies to the brink.

The Iran Chamber of Commerce report underscores the urgent need for structural reforms to halt the economic slide. For now, businesses and households brace for tougher times as the nation navigates an increasingly precarious economic landscape.

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“In the Islamic Republic of Iran, the pandemic’s impact on the services sector was limited and oil production and industrial activity rebounded, minimizing the slowdown in economic growth,” the report stated.

The bank has increased its forecast of Iran’s economic growth by 0.2 percent compared to its previous report published in June 2021.

“Growth in the Islamic Republic of Iran in 2022 has been revised marginally higher with tapering COVID-19 mobility restrictions benefiting the services sector and a gradual recovery in the oil sector,” the report said.

It stated that the Iranian Gross Domestic Product (GDP) is going to register a growth of 2.2 percent in 2023.

In January 2021, the bank had predicted a 1.5 percent GDP growth for Iran in 2021 and a 1.7 percent growth for 2022.

World Bank also sees the global economy grow by 4.1 percent in the current year, expecting it to further slow in 2023.

“The global economy is set to experience its sharpest slowdown after an initial rebound from a global recession since at least the 1970s. Global growth is projected to decelerate from 5.5 percent in 2021 to 4.1 percent in 2022, reflecting continued COVID-19 flare-ups, diminished policy support, and lingering supply disruptions. Growth is envisioned to slow further in 2023, to 3.2 percent, as pent-up demand is depleted and supportive macroeconomic policies continue to be unwound,” the report read.

According to the World Bank, growth in advanced economies is forecast to decelerate from five percent in 2021 to 3.8 percent in 2022 as the unwinding of pent-up demand only partly cushions a pronounced withdrawal of fiscal policy support. Growth is projected to moderate further in 2023 to 2.3 percent as pent-up demand is exhausted.

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Speaking on Tuesday in a meeting with students of Sharif University of Technology on the occasion of Student’s Day, Raisi referred to the exchange rate fluctuations and said, “We have accurate news that some people are trying around the clock to raise the exchange rate and tie the negotiations to the economy with the aim of imposing their demands on the nation. Intelligence devices are working to introduce the individuals.”

“Some of these people inside and some abroad are looking to raise the price of the currency in cyberspace and in real space,” he added.

Emphasizing that his administration will not tie the economy and people’s livelihood to the negotiations, the President stated, “The available foreign exchange resources are in a good condition and, unlike the first days when we took office, we are not worried about the situation.”

“Oil sales are also in good conditions despite threats and sanctions, and oil and condensate exports have increased,” he said.

“In spite of all the problems, efforts have been made to increase the country’s revenues and oil and condensate exports, as the number of exports has increased by 40% during this period,” he said.

Raisi further noted, “After the visit to Tajikistan, the volume of economic exchanges with the country has tripled.”

The president spoke in a ceremony marking the National University Student’s Day.

This year’s ceremonies are being held under the motto of “forthright, transparent, university-student like”.

During the ceremonies at Tehran-based Sharif University of Technology, the minister of science, research and technology and minister of health were also accompanying President Raisi.

The president visited an exhibition on the achievements of the Center for Research and Knowledge-Based Companies of Sharif University of Technology. The exhibition is set up with the motto of “Propellant for Innovation, Expression of Self-Esteem”.

The president was briefed on the latest achievements of the professors and students of Sharif University of Technology in the fields of aerospace, car industry, telecommunications, water and energy, solar power plants, environment, agriculture, electronics, medicine and medical equipment.

University students also offered their viewpoints and proposals to the president, who reiterated the government’s support for technological activities.

During the ceremony, Raisi emphasized the importance of preserving and attracting academic elites, describing university top students and technologists as the country’s assets.

He said Sharif University of Technology should spearhead efforts to preserve the elites, adding that this university is an important center for attracting top students in Iran.

Pointing out that today change is necessary in all areas, Raisi said “Changing the current situation to the desired status should be based on science and innovation.”

“With science and technology, we can create change in different fields of industry and agriculture and stop selling raw materials, and this is possible, just as we have made significant progress in the industries that were subject to the most restrictions and sanctions,” the Iranian president added.

The president noted that Iran is facing problems including drought and universities can undoubtedly play an important role in resolving these problems.

Raisi also stressed that government bodies and companies do not have the right to use foreign products when domestically manufactured quality goods are available to them.

In this meeting, a number of professors of Sharif University of Technology expressed their views on the government’s support for research and academic activities and the relationship between the government and universities.

The National University Student’s Day is marked every year in Iran on November 7 to commemorate three students, who were killed by forces of the previous Pahlavi regime during protests against an official visit by then US Vice President Richard Nixon.

The visit took place in 1972, nearly 18 years after the US intervened in Iran to reinstate the Pahlavi regime in the hugely controversial coup of 1953.

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Speaking in an online meeting with the governors of the central banks and heads of financial institutes of the MENAP region (Middle East, North Africa, and Pakistan) on Saturday, Ali Saleh-Abadi put Iran’s GDP growth in the second quarter of 2021 at 6.2 percent, IRIB reported.

“Like many other countries, Iran has also suffered severely from the coronavirus pandemic but is now on a solid path to economic recovery. The latest official statistics show a 6.2 percent growth in Iran’s GDP in the second quarter of 2021, which is a significant achievement despite the severe restrictions preventing the country from accessing its foreign resources and the impossibility of purchasing vaccines from abroad due to the U.S. sanctions,” Saleh-Abadi said.

According to the CBI governor, the country’s economy excluding oil grew 4.7 percent which is also another indication of the country’s economic recovery.

“Also, due to the financial and monetary support policies of the government and the Central Bank of Iran, the unemployment rate in the second quarter of 2021 fell to 8.8 percent, which shows a decrease of one percent compared to the same period last year,” he added.

Mentioning the negative impacts of the coronavirus pandemic on the global economy, Saleh-Abadi said no country is safe unless all countries are vaccinated against the virus, adding: “Given the single-digit vaccination rate in low-income countries, it is difficult to meet the International Monetary Fund (IMF)’s target of 40 percent vaccination by the end of this year and 60 percent by mid-2022, and any delay in vaccination in any region is the biggest threat to the global economy.”

The official further welcomed the IMF’s new plan and strategy to help members meet the challenges of climate change, stating: “We all agree that climate change is a global threat that is disproportionately burdened by countries with a small share of carbon emissions. Climate change has many characteristics and dimensions, which are of different importance in different regions and countries.”

IMF, in its latest World Economic Outlook report titled “Recovery During a Pandemic”, predicted 2.5-percent GDP growth for Iran in 2021, with no change from the fund’s previous report.

The entity modified its forecasts of the global economic growth from six percent in its previous report to 5.9 percent; the fund expects the global economy to shrink even more in 2022 to settle at 4.9 percent in 2022.

Based on the IMF data, despite the sanctions and the negative impact of the pandemic, the Iranian economy is going to outperform many countries both in the region and across the world.

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The chief banker cited figures released by the CBI’s Economic Accounts Department showing that Iran’s gross domestic product (GDP) grew by 3.9 percent with oil and by 2.9 percent without oil in the quarter to December 20.

“Thus, one can definitely announce the transition of the Iranian economy from the difficult period of sanctions and the recession associated with it to a period of renewed economic growth,” said Hemmati.

Iran has been hit hard by a series of unprecedented US sanctions since the middle of 2018 when a former government in Washington decided to pull out of an international agreement on Iran’s nuclear program.

Sanctions have largely targeted Iran’s exports of crude as its main source of earning hard currency. However, the bans have triggered a sweeping reform program in the Iranian economy as the government continues to diversify its revenues away from oil by encouraging increased activity in the manufacturing and agriculture sectors.

Hemmati hailed the fact that Iran had recorded two-quarters of economic growth at a time many countries are grappling with a deep recession.

He said the latest CBI data on GDP growth and the performance of various sectors of the economy during the quarter to late December will be published next week.

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“The FATF will multiply our vulnerability; if there are solutions for ditching cruel sanctions for exporting oil and bring money in, the ratification of FATF will prevent such solutions.”

Actually, accepting the bills means disclosing the economy’s secrets of getting around sanctions and no rational mind accepts this, he added.

The government has offered conditions for ratifying the FATF but the issue does not know any condition, Zakani added.

Iran will be faced with new excuses by enemies if it passes the bills, he said, adding, “FATF, actually, is a political issue, not a specialized one.”

On October 7, 2018, the Iranian Parliament voted in favor of the CFT. However, the oversight Guardian Council rejected the bill by finding 22 faults with it.

However, the Expediency Council set aside studies to approve the Palermo bill back in October 2019 for it believed Palermo and CFT would help the United States to identify the ways Iran circumvents the sanctions.

The Financial Action Task Force announced in June 2019 that Iran had until October to complete reforms that would bring it into line with global norms or face consequences.

In December 2020, in a response to the President’s request, the Leader of the Revolution agreed with an extension of the time for reviewing the FATF bills.

Previously, Alireza Zakani said If the US, France, Germany, and the UK do not act timely, we will say goodbye to the Additional Protocol on February 21,  on Sunday in the open session of Iranian Parliament, adding, “We will witness a decrease in the number of IAEA inspectors compared to what Iran has promised in the NPT.”

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Commenting on the domestic banking system’s supporting plans for reducing the ‎negative economic impacts of the coronavirus crisis in the country in an ‎Instagram post on Saturday, Abdolnaser Hemmati wrote, “All that the government ‎and the CBI want is to provide the people of the country with greater and more ‎extensive gratuitous financial assistance.”‎

He regretted, however, that cruel US sanctions, coupled with a decline in oil prices ‎and the costs involved in the fight against the spread of the virus, have created an ‎economic bottleneck for the government, limiting its resources. ‎

Hemmati added that despite these problems, the Iranian banking system will ‎immediately grant low-interest (four-percent) loans (between $238 and $476) to ‎four million low-income families in the country. ‎

He added that the CBI will also offer low-interest loans to the economic agencies ‎and businesses harmed by the spread of the virus.‎

Earlier, Hemmati said the domestic banking system will provide maximum ‎assistance to the domestic tourism sector that has been harmed by the spread of the ‎coronavirus.‎

He made the remark in an Instagram post, adding, “Today, along with First Vice ‎President [Es’haq Jahangiri], I attended a meeting with those involved in the ‎domestic tourism, cultural heritage, and handicrafts sectors. The officials of these ‎sectors, as well as the heads of the related associations, expounded on the problems ‎they face on account of the coronavirus contagion in the country at a time when ‎their activities should have been at their peak.” ‎

Hemmati said under normal circumstances, hotels, tourism and handicraft centers ‎as well as travel agencies in Iran reach the peak of their activities and income ‎generation during the New Year holidays (March 20-April 1), adding that this year, ‎their activities were completely suspended during the high season.‎

In the meeting, he added, they presented remarkable proposals concerning the ‎postponement of the due date for the payment of the installments and receiving ‎new loans to prevent further damage to their businesses.‎

The CBI governor also stressed that the biggest harm the virus causes is ‎endangering the lives of Iranian people, which is far more important than its ‎negative impacts on the economy.‎

He gave the assurance that the country’s banking system would provide, with ‎maximum assistance, the domestic tourism sector harmed by the coronavirus ‎spread, as prosperity would be restored to the sector only if the situation in the ‎country returns to normal and the spread of the virus is fully contained.‎

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