Significant Recession in Iran's Industries Following Electricity Restrictions

The Research Center of the Parliament has reported a significant recession in the country's industries in the first month of electricity supply restrictions during the summer, stating that industrial enterprises in July of this year have experienced a deeper recession in terms of production and sales indices compared to the spring season. Data from the report indicates that in the first month of this summer, the sales index has decreased more significantly compared to the production index, indicating a worsening crisis of effective demand in Iran's economy. The newspaper Donya-e-Eqtesad, citing this report, wrote: 'The continuation of the current situation will cause more enterprises to operate at half of their production capacity, and this capacity will gradually decrease, ultimately putting them at risk of closure.' According to this report, in July 1403 (2024), the production index and sales index of listed industrial companies have not only decreased by 8% and 10% respectively compared to the previous month but have also dropped by 3.5% and 5.4% compared to July of last year; this indicates that the recession in the industrial sector has other causes in addition to the summer electricity shortage. The prevailing recession in the industrial sector in July this year comes at a time when the electricity shortage in August and September is expected to be much greater than in July, and it is anticipated that production and sales in the previous month have plummeted even more severely, with the stock market in August witnessing a decline in the index balance of 29 out of 30 main industries. The electricity cuts in industrial parks in Tehran 'led to street protests.' As blackouts continue in various cities across Iran due to electricity shortages, a union official announced on Tuesday that power outages in some industrial areas of Tehran have led to street protests. Mehdi Bostanchi, head of the Coordination Council of Industrial Parks, wrote: 'Yesterday, there were street protests in the Khavaran industrial park due to power cuts.' Details from the report show that the pharmaceutical sector faced a 17% drop in production in July. In recent months, numerous reports have highlighted the dire situation in the pharmaceutical sector, including the volume of government debt to this sector, lack of sufficient currency allocation for importing raw materials, liquidity shortages in pharmaceutical companies, and even power outages affecting these units. Additionally, the food and beverage sector experienced a decline of over 10%. The Research Center of the Parliament states that in July this year, out of fifteen listed industrial activities, only four activities saw an increase in the sales index, and six activities saw an increase in the production index. Data from the Central Bank shows that last year, the industrial sector contributed only 0.7% to the 4.5% economic growth.