Summer Chill in the Industrial Sector

The report from the Ministry of Industry, Mine and Trade regarding the performance of this sector in the four months ending in July of this year indicates that the issuance of industrial permits has experienced a negative and declining trend during this period. According to the statistics announced by the Ministry of Industry, Mine and Trade, a total of 1,298 industrial establishment permits were issued in July of this year, which represents a decline of more than 9 percent compared to the previous month, June 94. However, the negative trend in the issuance of industrial establishment permits, which can be interpreted as a decrease in new investments in the industrial sector, was not limited to July and, in total, during the first four months of this year, the number of issued industrial establishment permits faced a decline of nearly 9 percent compared to the same period last year. In the first four months of this year, 4,953 industrial establishment permits were issued, whereas in the first four months of 93, the number of these permits exceeded 5,400. The decrease in the issuance of industrial establishment permits occurred while prior to the official announcement of the agreement between Iran and the P5+1 countries, economic observers in Iran predicted that with assurance from this agreement, the investment situation in Iran's industry would improve. The expected employment for the permits issued in the first four months of this year also saw a 26 percent decrease compared to the expected employment for permits issued in the first four months of 93. Under the permits issued during the first four months of 94, the creation of 106,912 jobs was anticipated, which represents a nearly 26 percent decrease compared to the expected employment in permits issued in the first four months of the previous year. Beyond the statistics of issued industrial establishment permits, the permits issued for industrial operating licenses also experienced a decline during this period, such that in July of this year, compared to the same period last year, there was a decline of over 3 percent in the issuance of operating licenses. During this period, the number of issued industrial operating licenses was 433, while in the same period last year, 447 industrial operating licenses were issued. An examination of the trend of issued industrial operating licenses in the four months ending in July of this year also indicates a 10 percent decline in the issuance of these licenses; during this period, a total of 1,473 industrial operating licenses were issued in Iran, whereas in the same period last year, the issued permits were equal to 1,637. In addition to the issued permits for industrial operating licenses, this sector experienced a negative trend in job creation in the four months ending in July. In these four months, the employment generated from industrial operating licenses compared to the same period last year experienced a 3 percent decrease, totaling 18,661 jobs. While the statistics published by the Ministry of Industry, Mine and Trade regarding the four-month performance of this sector are not particularly promising, the Central Bank's statistics on the average producer price index in August of this year indicate that this rate has reached slightly above 10 percent (10.2). This rate has seen a decrease of about one percent compared to the average production inflation rate in July. The point-to-point inflation rate of the producer price index in this month, which compares the producer price index in August of this year to August of last year, shows a figure of 5.6 percent, which remained stable compared to the point-to-point production inflation rate in July. However, according to the Central Bank's report, the monthly production inflation rate in August reached 0.8 percent. The monthly inflation rate in the previous month, July 94, was negative 0.2 percent, and this declining trend did not continue in August. Nevertheless, Ali Tayebnia, the Minister of Economic Affairs and Finance, recently stated based on this data and the average producer price index remaining at the 10 percent level, that he predicted the inflation index would continue to decline in the coming months, and the declining trend of consumer inflation would persist. Despite the Minister of Economy's optimism in addressing the high inflation issue in Iran's economy, the statistics from the Ministry of Industry, Mine and Trade regarding the four-month performance of this sector indicate that the prevailing recession in Iran's economy remains the most serious problem and economic challenge facing the government.