The three Iranian provinces of Qazvin, West Azarbaijan and South Khorasan had the best business environment in the third quarter of the current Iranian year (Sept. 23-Dec. 21, 2022), latest data released by Iran Chamber of Commerce, Industries, Mines and Agriculture show.
The National Business Environment Index, measured by ICCIMA, stood at 6.05 in Q3 to register a 0.17 percentage point or 2.89% increase compared with the preceding quarter and a 0.11 percentage point or 1.78% increase compared with the corresponding quarter of last year.
The index measures business friendliness of Iran’s economy, with 10 indicating the worst grade and a decline showing an improvement in the business environment.
The ICCIMA index is fashioned after World Bank’s discontinued “Ease of Doing Business” index, a tool formerly used for countries seeking to measure costs of doing business.
The index stood at 5.88 in Q2 (June 22-Sept. 22) and 6.07 in Q1 (March 21-June 21).
“Unpredictability and fluctuations in the prices of raw materials and products”, “instability in policies, regulations and executive procedures related to businesses” and “difficulties associated with funding from banks” affected Iran’s business environment during the period under review (fall), according to the findings of the 25th round of this report.
The three provinces of Sistan-Baluchestan, Kurdestan and Hormozgan had the worst business environment in Q3.
The average real production capacity of economic enterprises participating in this survey stood at 43.51% in Q3, indicating an increase of 2.36 percentage points compared with the preceding quarter.
The services sector had the worst business environment in Q3 with 6.07 points followed by industry (5.96) and agriculture (5.83).
Among 21 categories of business activities, the worst three business environments were registered for “construction”, “real-estate services” and “professional, scientific and technical activities” and the top tier included “real-estate services”, “mining” and “human health and social work”.
Enterprises with 6 to 10 employees had the best business environment with a score of 5.86 while those with more than 50 to 100 and less than five employees had the worst business environment each with a score of 6.09.
Businesses operating for less than two years and more than 16 years had the best business environment (5.97 each) while those operating for 6-10 years had the worst business environment (6.09).
Provincial Labor Market
Six provinces, namely Isfahan (10%), Chaharmahal-Bakhtiari (10.1%), Hormozgan (11.6%), Sistan-Baluchestan (12.2%), Kermanshah (12.9%), Lorestan (13.3%) and Kurdestan (22.6%), registered double-digit unemployment rates for people of ages 15 and above in the third quarter of the current Iranian year (Sept. 23-Dec. 21, 2022), latest data released by the Statistical Center of Iran show.
Iran’s overall unemployment rate, the proportion of the jobless population of ages 15 and above, stood at 8.2% in Q3, indicating a 0.7% year-on-year decrease. A total of 2.13 million Iranians were unemployed in Q3. Men’s unemployment stood at 7% while the rate for women hovered around 14.3%. Over 1.52 million men and 616,350 women of ages 15 and above were jobless in Q3. The unemployment rate was 8.9% for urban areas (1.77 million people) and 5.8% for rural areas (360,100 people).
Khorasan Razavi Province saw the lowest unemployment rate of 4.9% among all Iranian provinces.
Khuzestan registered the highest unemployment rate of 13.8%, Zanjan Province had the highest labor force participation rate (50%) and Ilam had the lowest labor force participation rate (31.7%). Tehran registered a 40.1% participation rate in Q3.
SCI put the Q3 labor force participation rate — the proportion of the population of ages 15 and above that is economically active either employed or looking for a job — at 41% or 2.62 million people, registering a 0.1% increase year-on-year. Men’s and women’s economic participation rates were 68.5% and 13.6% respectively in the same period. A total of 21.85 million men and 4.32 million women of ages 15 and above were economically active in Q3, i.e., they were either employed or looking for a job.
Zanjan registered the highest employment rate of 46.3% while Sistan-Baluchestan and Kohgilouyeh-Boyerahmad each filed the lowest employment rate of 30.2% among all Iranian provinces. Tehran’s employment rate stood at 40.1%.
The total Q3 employment rate was 37.7% (24.07 million), up 0.4% compared with the same quarter of the last Iranian year. Employment rates for men and women were 63.5% and 11.7%, respectively, which constituted 20.33 million men and 37.33 million women in Q3.
Employment rate was 36.5% (17.96 million people) in urban areas and 40.1% (5.81 million) in rural areas.
Provincial Inflation
The Statistical Center of Iran’s latest survey of the country’s 31 provinces shows Lorestan registered the highest annualized inflation with 51.6% while Khuzestan posted the lowest with 41.3% in the current Iranian year’s 10th month (Dec. 22, 2022-Jan. 20).
The general average goods and services CPI in Iran over the 12-month period ending Jan. 20 increased by 46.3% compared with the preceding year’s corresponding period.
The annualized inflation reported by SCI on a monthly basis has reached a new high. Only in 1995-96 and 1996-97 Iranian years did Iran experience inflation rates above the current level. Notably, this is the eighth consecutive month the annualized inflation is rising after the government put into effect what it touted as “economic surgery” by abolishing the heavily subsidized import of essential goods.
On a month-on-month basis, the growth in CPI was the highest (5.6%) in Sistan-Baluchestan Province, while Kerman Province posted the lowest (2.1%).
The overall CPI, using the Iranian year to March 2017 as the base year, stood at 587.4 in the month ending Jan. 20, indicating a 4.3% rise compared with the previous month.
The year-on-year inflation for Sistan-Baluchestan was reportedly 66.7%, the highest among all provinces. The year-on-year CPI growth was the lowest for Bushehr Province with 43.9%.
The overall goods and services Consumer Price Index in Iran saw a year-on-year increase of 51.3%.
Notably, the CPI of “food and beverages”, one of 12 groups of goods and services surveyed by SCI, stood at 870.4 in the month ending Jan. 20, indicating a 4.1% increase from the previous month. The index registered a YOY increase of 70.1% and the CPI of the group increased by 65.7% in the 12-month period to Jan. 20 compared with the corresponding period of last year.
The rise in prices of goods and services accelerated at an unprecedented pace after the government decided to overhaul the import subsidy system.
The government move saw the abolition of the controversial practice of allocating cheap dollars at the rate of 42,000 rials per dollar, locally known as the Preferential Foreign Currency, to import essential goods, including corn, soymeal, unprocessed oil, oilseeds and barley, in addition to wheat, flour and medicine.
The market value of the dollar is currently above 440,000 rials.
“Until now, we have been paying to producers [read importers] but now the subsidies go to consumers. In fact, the Preferential Foreign Currency has not been ceased, rather the allocation method has changed,” President Ebrahim Raisi said in a televised speech on the eve of the introduction of the move in May.
In his speech, Raisi emphasized that the removal of cheap dollar allocation will not lead to a price rise in wheat, flour and medicine. However, the move has led to a dramatic rise in the prices of essential goods. In fact, the prices of all commodities and services have also risen suddenly in a ripple effect.
Also known as necessity or basic goods, essential goods are products consumers will buy, regardless of changes in income levels.
The overall CPI calculated for urban areas stood at 578.5 during the month under review, indicating a 4.3% rise compared with the previous month.
The growth in CPI measured for provincial urban households compared with the previous month was highest (6.1%) for Sistan-Baluchestan while Kerman recorded the lowest monthly inflation rate with an increase of 2.5% compared with other provinces.
The index registered a year-on-year increase of 50.6% for urban areas. Goods and services CPI of Sistan-Baluchestan’s urban areas registered a year-on-year rise of 61.6% during the month under review, the highest among all provinces. The CPI increase in urban areas was the lowest for Bushehr with 41% YOY.
The average CPI in urban areas for the month under review increased by 45.5% compared with the same period of last year. Households living in the urban areas of Lorestan experienced the highest annual inflation (with 50.8%) while those of Khuzestan witnessed the lowest annual inflation (40.2%) among all Iranian provinces.
The overall CPI calculated for rural areas stood at 637.1 in the month under review, which indicates a 4.3% increase compared with the previous month.
The growth in CPI of rural households compared with the previous month was highest for Bushehr with 6.3% while rural households living in Kerman Province saw a 1.3% growth.
The index registered an average year-on-year increase of 54.9% for rural areas in the same month. CPI of Sistan-Baluchestan Province’s rural areas registered a YOY increase of 77.8% during the 10th month of the Iranian year, the highest among all provinces, whereas the year-on-year CPI increase was the lowest for Zanjan with 45.1%, compared with other provincial rural areas.
The average goods and services CPI of rural areas in the month under review increased by 50% year-on-year.
Qazvin registered the highest annual inflation in rural areas (55.4%) while Khuzestan posted the lowest annual inflation rate (43.8%).
The average goods and services CPI in the 12-month period ending Jan. 20 for Tehran Province, wherein lies the capital city, increased by 44.2% compared with the corresponding period of last year.
SCI had put Tehran’s average annual inflation rate for the preceding Iranian month, which ended on Dec. 21, at 43.3%.
The consumer inflation for the month under review registered an increase of 48.4% year-on-year while it was 47.9% in the preceding month.
CPI (using the Iranian year to March 2017 as the base year) of Tehran Province stood at 582.9 in the month ending Jan. 20, indicating a 4.2% rise compared with the month before. Month-on-month consumer inflation was 2.9% for the preceding month.
SCI put Tehran Province’s urban and rural 12-month inflation rates for the month under review at 44.2% and 46%, respectively.
CPI registered a year-on-year increase of 48.4% for urban areas and 50.6% for rural areas in the month under review.
The overall CPI reached 582.5 for urban households and 598.2 for rural households, indicating a month-on-month increase of 4.2% for urban areas and 3.3% for rural areas.
