Routing Autumn Economic Growth – Ibna

According to data recently published by the Statistics Center of Iran, the economic growth rate in the summer (compared to the same period last year) was a positive equivalent of 0.2 percent. The positive economic growth for the summer season occurred while the growth rate for the eight consecutive seasons (between the summer of 1997 and the spring of 1999) and after the withdrawal of the United States from the BRICS, was in the negative range. The economic growth situation of the summer season was divided into different sectors in such a way that the group of industries and mines (including the oil sector) with 4%, had the highest growth compared to the summer of last year and the agricultural group recorded a positive growth of 2.7%. In contrast, the services group was the only group to have a negative growth rate in the summer, shrinking by a negative 3.4 percent. An important point about the oil sector is that there seems to be a relative opening in this sector during the summer season because the GDP growth rate without oil was negative 0.2 percent. Given the continuing prevalence of coronary heart disease in the country during the summer, which has affected the jobs of the service group, especially in sectors such as tourism and hospitality, more than other sectors, the negative growth of the services sector seems quite reasonable.

Despite the positive growth in the second quarter, the study of the situation and the situation in the country as well as the leading variables show that the probability of positive economic growth in the autumn is not very high. The index of purchasing managers of the industrial sector, as one of the most important variables predicting economic growth, which in the first half of the year was often in the boom range (above 50 units), entered the recession zone in October with a significant decrease and the number was 47.6. Has registered. Regarding the reasons for the decline in the Purchasing Managers’ Index during November, it seems that the issue of the US election and the effect of Biden’s election on changing the direction of expectations has been one of the most important reasons. In fact, it seems that the decrease in demand for speculation and speculation in various commodity markets and the change in the unfavorable psychological atmosphere in the markets after the non-election of Trump, has led to a decrease in corporate sales.

A study of the components of purchasing managers’ index also shows that despite the slight decrease in production, the sales of firms has decreased sharply and the lowest amount of this variable has been recorded this year (except April) during November. On the other hand, the stock of final products produced by companies in Anbar has increased and its sub-index has recorded the highest level this year. The lack of effective demand in commodity markets (due to changes in price expectations) seems to be the main factor that has reduced firm sales in October and, if these conditions remain stable, will likely affect their production in the coming months. Another important point to consider in this regard is the issue of new orders from firms, which have decreased significantly in November, and therefore we can expect that the future production of firms will also experience a relative decline. The component of expectations regarding the level of production next month also decreased in November and is another evidence for a possible decrease in production in December. Finally, it should be noted that due to changes in production and sales, firms in November have made a significant adjustment of manpower, and this will have a direct effect on the level of production.

In addition to what was mentioned about the outlook for manufacturing firms based on the Purchasing Managers’ Index, the coronary heart disease also had very adverse effects on the economy, which intensified in December. Due to the implementation of the comprehensive plan to restrict traffic and public gatherings from the beginning of December in Tehran and some other cities of the country, which was accompanied by widespread closure of businesses and extensive traffic control regulations, it is expected that the level of production activities will decrease in December. . Of course, in the implementation of this plan, most of the restrictions were focused on trade unions and service occupations (and not industrial enterprises and producers of goods) and it is expected that production in the service sector will decrease further, but it should be noted that the closure of trade unions Distribution means reducing their demand for products produced by firms (and increasing inventory levels). Thus, the production of goods and services is expected to decrease in December.

As a summary of the outlook for the country’s economic growth in the fall, on the one hand, given the changing economic climate after the US election in November and falling expectations for prices (which can reduce effective demand, especially cautious and speculative demand). And create a kind of demand-side recession) and on the other hand, due to the continuing effects of coronary heart disease and reduced levels of productive activity after the exacerbation of the disease and the beginning of a new round of job closures, positive economic growth is unlikely. Of course, the possible increase in oil sales during the autumn season (the statistics of which are not currently available due to confidentiality) is one of the things that can change this outlook and positive economic growth in the third season.

Source: Ibna

Mehdi Keramatfar (Economics Expert)