Economy, Domestic Economy

Industrial Production Slows

Industrial Production SlowsIndustrial Production Slows

Industrial Production Index fell by 19.3% in the first quarter of the current Iranian year (March 21-June 21) compared with the similar period of last year, according to a report by the Central Bank of Iran’s Economic and Statistical Analysis Center.

Compared to the fourth quarter of last year, the index was down 1% while year-on-year negative growth of 5% was recorded in the index for the year ending on July 21, despite having recorded positive growth last year.

The report, which is prepared exclusively for Tehran Chamber of Commerce, Industries, Mines and Agriculture, measures IPI based on data taken from the companies listed at Tehran Stock Exchange, which represent 39% of total industrial production in Iran. Therefore, overall changes in industrial production are well represented by the index.

Petroleum products comprise about a third of industrial production in Iran. Low performance by the sector in the first quarter of the year negatively affected the index. The IPI, excluding petroleum products, grew 5.9% over the fourth quarter of last year but was still down 7.6% compared with last year’s similar period.

The report blames the sanctions (imposed by the West over Iran’s nuclear energy program), global decline in oil prices and poor market demand for slow growth in industrial production by various sectors.

The decline in global prices has also negatively impacted growth in some sectors. For example, the petrochemical sector recorded only 11% growth in export value during the first quarter of current year over the corresponding period a year ago despite 53% growth in the quantity of petrochemical exports.

Meanwhile, the automotive and auto part sector was a major contributor to overall industrial production during the period. The sector’s IPI grew 10.7% over the previous quarter and was up 6.8% compared with similar period of last year.

  Production Forecast

Based on production forecasts provided by the TSE listed companies, the industrial production index is forecast to grow 1.6% in the year’s second quarter (June 22-September 22) over the first quarter. Meanwhile, the index is expected to decline by 1.4% compared with the similar period last year.

All sectors, apart from the automotive sector, have projected positive forecasts for the second quarter. Meanwhile, only chemical products, basic metals, cement and non-metallic minerals sectors have predicted positive growth over last year’s similar period.