Iran’s industrial and commercial sectors are entering a critical phase as mounting economic uncertainty, currency volatility and repeated policy disruptions erode production capacity and business confidence.
Recent surveys and field interviews across a wide range of industries—from apparel and home appliances to polymers, dairy, fast-moving consumer goods and mining—paint a picture of an economy struggling to stay afloat amid structural constraints and short-term shocks.
The latest Purchasing Managers’ Index (PMI) for Iran’s manufacturing sector stood at 49.9 in Azar (November–December), marking the seventh month of contraction during the first three quarters of the current Iranian year.
More troublingly, key sub-indicators such as raw material inventories and employment remained below the 50-point threshold, signaling persistent supply-side stress and rising labor insecurity.
Recessionary Streak
The PMI for the overall economy fell to 48.9, extending a recessionary streak now lasting 21 consecutive months.
Meanwhile, the index for input prices surged to its highest level in 62 months, reflecting the sharp depreciation of the rial and rising import costs.
Business operators identify a familiar but intensifying set of challenges: rapid currency depreciation, frequent changes in economic policy, delayed foreign exchange allocation, long queues for import approvals, declining household purchasing power, weak consumer demand and the absence of a credible medium-term outlook.
These pressures have been compounded by internet disruptions, which have disrupted sales channels, international communications and supply chains—particularly for businesses dependent on digital platforms and cross-border trade.
In the apparel industry, rising material costs and falling consumer demand are squeezing margins. “With the dollar climbing and purchasing power shrinking, the clothing market is contracting,” said an industry participant, warning that workforce downsizing may soon become unavoidable.
Similar concerns were echoed in the home appliance sector, where producers report falling sales as households prioritize basic necessities over durable goods.
One manufacturer estimated that recent currency reforms could raise production costs by at least 40%, pushing prices beyond the reach of many consumers.
The detergent and polymer industries face acute import bottlenecks. Small and medium-sized firms, heavily reliant on imported inputs, are particularly vulnerable.
In detergents, retail prices reportedly jumped by nearly 50% in a single week, threatening demand and accelerating production cutbacks. Polymer producers, meanwhile, cite daily price fluctuations that have eliminated any possibility of planning, while order volumes continue to fall.
Even relatively defensive sectors such as dairy are under strain. Rising feed import costs have lifted production expenses, yet political sensitivity around food prices limits producers’ ability to fully pass costs onto consumers. As a result, premium product lines are losing ground, while “economic” brands with lower margins dominate sales.
Hardest Hit Businesses
Trade-related businesses appear among the hardest hit. Importers and exporters say internet disruptions have damaged trust with foreign partners, delayed shipments and effectively frozen revenues.
Although policymakers argue that recent currency reforms are necessary to eliminate rent-seeking, many traders believe the timing—amid political tension and weak demand—has magnified the shock.
Mining, often viewed as one of Iran’s more resilient sectors, is also feeling the strain. Energy shortages, regulatory instability and growing barriers to trade and investment have increased the risk of shutdowns among smaller private operators.
Across sectors, the message is consistent: without swift stabilization, clearer policy coordination and measures to restore connectivity and confidence, Iran’s industry faces rising layoffs and deeper stagnation. For now, producers are navigating what many describe as “a foggy road,” focused less on growth than on survival.
