International Finance

Iran’s overall economy PMI plunges to a 23-month low

IFM_Iran’s PMI contraction-image

Iran’s Purchasing Managers’ Index (PMI) stood at a 23-month low in the last fiscal month which started on March 21, 2021, and ended on April 20, 2022. It settled at 37.49 for the month under review from 54.74 which was registered the previous month. This indicated a decline of 37.07%.

As for the PMI, it indicates the prevailing direction of economic trends stated in the manufacturing and service sectors. On a scale of 100, PMI over 50 indicates an economic expansion whereas below 50 indicates contraction. Reading of 50 implies no change.

As for the definition, PMI is an index of the winning direction of the economic trends. It aims to provide information about business conditions to company directors, analysts, and purchasing managers.

In accordance with the Statistics and Economic Analysis Centre of Iran Chamber of Commerce, industries, Mines, and Agriculture, the first fiscal month which started in the month of March 21 usually sees a decline in the economic activity every year as it starts with the Iranian New Year holidays. This is because businesses only have 15 working days.

Considering the shortage of the working capital along with the decline in the purchasing power. All this has led to a decline in economic activities.

Apart from all this, the geopolitical issues include the nuclear deal, the price of the dollar against the rial, a decline in demand, and a rise in raw materials. All these factors have given rise to confusion among the business owners as well as the producers, giving them a great amount of difficulty as to what to plan ahead and what can they expect to look forward.

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