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Mohammad-Reza Mortazavi, head of Iran's Flour Producers Association, said on May 2 that the country was more dependent than ever on foreign grain. He said it would have to import more than 20mn tonnes of grain in 2022. With global wheat prices soaring amid impacts of the Ukraine war—Ukraine has millions of tonnes of wheat unable to leave ports due to Russia’s blockade—sourcing enough of the commodity at reasonable prices has become a huge task.
The Iranian state has spent roughly $8bn a year since 2018 on subsidising food imports to offset inflationary pressures on the populace; however, in recent months the accumulated stresses caused by US sanctions—including the blocking of Tehran’s assets abroad by the threat of secondary sanctions aimed at international financial system players—have left the government’s coffers decidedly bare.
If the cheap dollar rate was entirely eliminated, prices across the country in the wholesale market could increase by five to six times.
4.2.2 PPI dynamics
Iran’s ‘Shamekh’ PMI plummets to 23-month low of 37
Iran’s purchasing managers’ index (PMI), known by its Farsi acronym Shamekh, for manufacturing and services hit a 23-month low in the country’s last fiscal month (March 21-April 20), Iran Chamber announced on May 10.
The PMI sank to 37.49 for the month under review from the 54.74 registered in the previous fiscal month, indicating a 17.25-point, or 37.07%, decline. Any figure below 50.0 indicates a contraction.
The Statistics and Economic Analysis Centre of Iran Chamber of Commerce, Industries, Mines and Agriculture is the sponsor and coordinator of the survey. Business sentiment in Iran has been hit by disappointment that Tehran and the major powers have not found a path for a reinstatement of the nuclear deal, or JCPOA, which would mean the lifting of heavy US sanctions that severely weigh on the country’s economy. Iran, meanwhile, has not condemned Russia’s invasion of Ukraine. Iranian traders are busy attempting to substitute for various products the sanctioned Russian market can no longer source from countries opposed to the war being waged by Moscow. However, the overall impact on Iran’s economy of the consequences of the Ukraine crisis, taking into account the balance of gains and losses, is not yet clear.
22 IRAN Country Report October 2022 www.intellinews.com