Overview: Iran Analysis Weekly Report June 12, 2016
12 June, 2016
Vistar Business Monitor
The CBI’s latest report on the producer price index (PPI) says the index fell 3.3% compared to a month earlier, down by 0.2%. The year-on-year inflation rate also fell by 0.4% reaching 3.1%. Since the PPI usually affects the consumer price index (CPI) in the same trend, one can expect single-digit inflation after so many years of having very high inflation.
Trade with foreign countries dropped in the first two months of the Iranian calendar year, according to the latest report by the Customs Administration. Exports fell 1.5% in weight and about 15% in value, due to the drop in gas condensates exports. Gas condensates exports fell 53% in weight and 55% in value. According to the report, Iran exported 2.69 million tons of gas condensates valued at $1.08 billion, accounting for 15% and 16% of the total exports based on weight and value, respectively. According to the report, the total trade reached $12.35 billion in value. The country imported $5.49 billion worth of goods in the two months. So, the trade balance was positive.
The research center of the Iranian Parliament has released a report on the banking system which is in “crisis,” warning that Iranian banks may be bankrupt soon. Out of the 7,333 credit and financial institutions currently operating in the country, only 1,000 are authorized by the Central Bank and supervised by it. The rest, known as unauthorized institutions, have been established by certain organizations which are not necessarily accountable to the Central Bank, the report noted. According to the report, the government debt increased by 4.8 times at the end of Shahrivar 1394 (September 2015) compared to that of Farvardin 1389 (April 2010.) The debt of the non-governmental companies has also increased by 3.1 times, the report said.
On the political note, the time is ripe now for the administration of President Hassan Rouhani to resume efforts to make the economy recover after delays in the past few months. The parliamentary elections and the formation of the new parliament have now passed and the month of Ramadan has provided a room for the administration to take a breath and resume economic efforts.
The most important success for the Rouhani administration will certainly be its economic achievements at the time of the election. The administration has three months to plant seeds in hopes that it could harvest in the months running to the election time. That is why the new parliament began its work with a meeting with the minister of economic affairs and finance, a move the administration hopes will gain the support of the majority of lawmakers in its efforts to get the economy out of recession.
On the international relations note, U.S. Congressmen Mike Pompeo, Lee Zeldin, and Frank LoBiondo had requested in February to visit Iran in order to “inspect” nuclear sites, observe the recent elections to ensure they were “free and fair,” meet with remaining American hostages, and receive “briefings” from the IRGC on the January detention of American sailors and on ballistic missile tests. The Foreign Ministry responded in a six-point statement that the nuclear agreement empowers only the International Atomic Energy Agency, not officials from participating countries, to monitor its implementation. The Foreign Ministry called the request inappropriate and a “publicity stunt.”
Russian Defense Minister Sergei Shoigu and Syrian Defense Minister Fahd Jassem al Freij traveled to Iran to meet with Defense Minister IRGC Brig. Gen. Hossein Dehghan on June 9. Supreme National Security Council Secretary Ali Shamkhani was also scheduled to meet with Shoigu. The talks focused on the “latest regional developments and ways to reinforce and expand the fight against terrorism.”
To subscribe the VBM Iran Analysis Report please visit http://vistarbm.com/Subscribe.aspx or send an email to contact@vistarbm.com.