The lack of liquidity and raw materials not reaching the production lines have grounded the companies. The witness of this situation is Shamkh of November 1402, which shows that Iran’s economy has moved towards stagnation.
According to Wikiplast, citing the world of economics, companies are facing a deadlock in rial and foreign currency financing, as the purchasing power of customers has decreased, domestic demand has also decreased, and export sales, especially in the industrial sector, have decreased. These negative pulses and economic uncertainty have finally caused the hope of producers to reach the lowest level in the last 8 months.
“Together” event for business transformation
Iran’s economy returned to the brink of recession in the second month of autumn 1402. The lack of liquidity and working capital and the blocking of the supply of raw materials have led to the closure of enterprises and the halting of production lines.
On the other hand, the non-provision of facilities by banks and the non-allocation of currency in a situation where companies are facing a lack of demand and non-receipt of claims from the government and customers has made it impossible to increase production despite the availability of facilities and equipment for production at higher capacities. Foreign sales also decreased in November due to policies of non-support for exports.
The report of Shamakh Aban 1402 indicates that economic enterprises are unable to maintain the scale of production due to lack of liquidity and reduced sales and exports, and some have faced the closure of production lines.
The report of the 50th edition of the Purchasing Managers’ Index (PMI) of the economy also shows that in November this year, Iran’s economy as a whole has experienced tighter conditions than in previous months, and with Shamakh’s number reaching 50.96, it has practically returned to the border between prosperity and recession. Although this month, the industry sector’s index has not changed significantly compared to the previous month, and this section’s index stands at 53.23; But the situation in other sectors of the economy has not been so favorable.
According to the research center of Iran Chamber, in November, the index of business activities (51.43) recorded the lowest value of the last four months, and the index of the amount of new customer orders (46.89) also reached the lowest value of the last three months.
Also, in this month, the index of the amount of export of goods and services (49.81) was reported for the fifth consecutive month, and the index of the amount of sales of goods or services (49.22) also decreased compared to the previous month and recorded the lowest value of the last three months.
The noteworthy point in the report of Shamakh Aban 1402 is that unlike many previous months, this time the expectations of economic activists regarding the activities in the coming month (56.01) have also decreased significantly and reached the lowest value in the last eight months.
Purchasing managers’ index of the whole economy
The latest survey compiled shows that the combined index of purchasing managers for the entire economy of Iran was reported as 50.96 in November, which has decreased (54.15) compared to October. Among the main components of the index, the amount of new customer orders has decreased more sharply compared to other components.
The business activities index (51.43) has recorded the lowest value in the last four months since August. The weak conditions of domestic demand, the decrease in foreign sales and the severe lack of liquidity due to the problems of providing working capital for the necessary raw materials have caused the supply side, namely manufacturers and service providers, to reduce their activities; Especially since the construction sector has witnessed a further decrease in activities.
In November, businesses reported weaker demand from domestic markets. The index of new customer orders (46.89) has recorded the lowest value of the last three months. The demand, mainly by the service sector, has been greatly reduced.
After successive inflationary pressures, customers are still facing a decrease in purchasing power. After two months of improvement in demand, companies have seen a decrease in customer orders again, the tougher financial conditions and restrictions on consumer demand due to the increase in living costs have contributed to a further decrease in orders in November.
In addition to the weak domestic demand, the index of exports of goods and services has decreased in November with a value of 49.81 for the fifth consecutive month. In general, due to the high cost of activities, existing currency problems and lack of export support, the export capacity of companies has decreased and the export sales of businesses have decreased, especially in the industry sector.
The price index of manufactured products and services provided (51.11) compared to October (59.96) has been associated with a significant decrease in the rate of price increase, and due to the low purchasing power of customers, the companies have kept the sales price constant to strengthen the demand and there was no change in the prices. .
The index of the amount of sales of goods or services (49.22) has decreased compared to the previous month and has recorded the lowest value of the last three months.
With the decrease in domestic sales as well as the decrease in export sales, sales in all three sectors of industry, services and agriculture, and especially in construction, have decreased. Expectations for activities in the coming month (56.01) have decreased significantly compared to the previous month and recorded the lowest value in the last eight months.
The largest decrease in the index was in the construction sector, and the companies in this sector are pessimistic about the next month, and in general, although there were no negative expectations among the producers, optimistic expectations have also decreased, which the companies attributed to low confidence in customer demand and concerns. They know about the decrease in the purchasing power of customers and economic uncertainty.
Index of purchasing managers in industry sector
Based on the data obtained from the companies of the industry sector, the index of purchasing managers of industry in November with the number of 53.23 is almost the same as last month and has slightly come out of the contractionary conditions. However, the overall industry index has been accompanied by declines in more than half of the activities. Among the main components, raw material inventory index has decreased the most.
The index of new customer orders (51.31) has decreased compared to the previous month, but the comparison of this index with the corresponding index of the whole economy shows that the demand situation in the industry sector is relatively better than the whole economy.
The index of the amount of goods exports in November with a number of 47.77 has decreased more rapidly compared to the previous month, and for the fifth consecutive month, a decrease in exports has been recorded.
Part of the decrease in exports is due to the high final price of products and the laws related to foreign exchange obligations (especially those who supply their raw materials with the free market currency) which has caused the competitiveness of goods to be exported and eventually exports are not economical. Policies that have led to non-support for exports have reduced trade even with neighboring countries.
For the fifth consecutive month, producers are still facing a shortage in the supply of raw materials, and in November, the inventory index of purchased raw materials was recorded at 48.85.
At the same time, the new customs laws regarding the restrictions and quotas on the import of raw materials have made many companies worried about the lack of raw materials needed in the coming months.
Also, the continuation of the problem of non-allocation of currency and non-payment of facilities and financing by banks has also caused companies to face the problem of lack of liquidity in supplying the raw materials they need; Especially, due to non-payment of companies’ claims by some government agencies and non-payment of customer checks due to their low purchasing power, companies do not have the necessary financial resources to provide working capital.
The weak domestic demand and the decrease in exports and foreign sales have caused manufacturing companies to record a decrease in the customer sales index (49.82) for the fifth consecutive month; However, the index has decreased slightly compared to the previous month.
The continuation of the decreasing trend of purchasing power and lack of liquidity of customers on the one hand and the decrease in export sales in the production sector for the fifth consecutive month on the other hand (due to export barriers caused by non-professional laws), has caused exports to be unable to replace the weak conditions of domestic demand with the help of Increase sales.
The main problems from the point of view of some economic activists in November 1402
Most producers are facing severe problems in supplying raw materials. On the one hand, after several months have passed since the money was deposited and it was blocked by the bank to allocate the currency needed for the raw materials, no currency has been allocated, and on the other hand, the goods and raw materials have not been cleared at the customs, which is also associated with the additional cost of storage at the customs. It has caused companies a lot of costs and problems in supplying raw materials (chemical industries). Also, new customs rules and regulations related to import quotas without considering the needs of producers will make many companies face the problem of double shortage of raw materials and will put new problems on the way of producers.
Due to the government’s limited foreign exchange resources, although money has been deposited in the bank by companies for a long time, the allocation of foreign currency is not done on time, and companies are facing problems in supplying raw materials.
The non-provision of facilities and bank loans has made companies face the challenge of financing, and it is not even possible to buy the necessary raw materials, and many production lines are closing down.
Some of the companies that have government clients are facing the problem of lack of liquidity due to not receiving their claims, and although they have the necessary facilities and preparation for business development, they are unable to make new investments and work development due to the lack of financial resources and non-payment of obligations from the government. .
The weakening of demand and the lack of purchasing power of customers have caused problems in providing working capital for companies, and in a situation where buyers buy less, producers do not have the necessary cash to buy raw materials. On the other hand, due to the severe lack of purchasing power of customers, many checks are not collected.
Some industries (metal industries) are forced to get their raw materials from the open market due to the limited supply of goods in the commodity exchange, which is too little for production needs.
There is a lot of delay in customs and customs system for transit and transportation, and high transit fees have made transit to neighboring countries not cost-effective.