- Iran's economy is showing early signs of stabilisation after the war-driven downturn, but business activity remains below the growth threshold as falling oil revenues, damaged factories, and weak demand continue to weigh on recovery.
- The latest PMI reports show an overall PMI at 45.9 and an industrial PMI at 48.2, indicating contraction but an easing pace of deterioration.
- Samad Hassanzadeh, head of the Iran Chamber of Commerce, attributed the relative improvement to private-sector efforts and a temporary easing of shocks.
- Food inflation reached 134% nationwide and 140% in rural areas in July, with significant price surges in dairy, meat, and coffee.
- Employment fell by 450,000 year-on-year, with 1.3 million full-time jobs lost; the deputy labour minister estimates over one million jobs destroyed by the war.
- The broader picture is therefore one of stabilisation rather than recovery in the conventional sense, as economic activity remains firmly in contraction territory.
- Hassanzadeh's comments underline that the latest numbers may suggest the economy is moving away from the sharpest phase of its post-war shock, but Iran has yet to cross the line separating contraction from expansion.
Iran's economy is beginning to stabilise after the recent war, with the Purchasing Managers' Index (PMI) at 45.9, indicating a contraction but a potential easing of deterioration.12
Samad Hassanzadeh, head of the Iran Chamber of Commerce, noted that businesses are maintaining activity despite challenges.3
However, the recovery remains fragile, with food inflation soaring to 134% nationwide and even higher in rural areas at 140%.4
More than two-thirds of monitored food items are now at crisis-level inflation, impacting consumption patterns significantly.
For instance, annual dairy consumption has plummeted from 130 kilograms per person in 2010 to just 40 kilograms today, as prices for dairy products have surged by 147% year-on-year.
The cost of meat has also skyrocketed, with beef, lamb, and chicken prices rising by 149% compared to last year.
Employment has taken a hit, with 450,000 jobs lost year-on-year, and unemployment now at 2.5 million.5
Gholamhossein Mohammadi, a deputy labour minister, stated that the war has directly destroyed over one million jobs and left around two million people unemployed when considering indirect effects.
Sustaining any economic improvement will require greater international engagement, according to Hassanzadeh.
“The industrial PMI at 48.2 signals factories still contracting, with manufacturing yet to regain expansionary momentum. Food inflation reached 134% nationwide in July, with dairy prices up 147% and red meat supply down 20% from 2024, forcing households to substitute chicken for beef and lamb.”
Firstpost
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