Iran Industrial Production Index Falls in Q1 After 4 Quarters of Growth

EghtesadOnline: After experiencing four consecutive quarters of growth, the Industrial Production Index for large manufacturing units in Iran registered a downturn during the first quarter of the current fiscal year that ended on June 21, new data released by the Central Bank of Iran show.

News ID: ۷۴۶۰۵۳

25 September 2018

According to latest figures disclosed by the monetary regulator, IPI decreased by 0.5% during the three months compared with the similar period of last year.

The reduced manufacture of pharmaceutical and chemical products, in addition to machinery and equipment, was mostly responsible for the decline.

IPI is an economic indicator measuring real output in various industries, with industrial production and capacity levels expressed as an index level relative to a base year, which the CBI considers to be the fiscal 2015-16, standing at 100, according to Financial Tribune.

In other words, the index does not express absolute production volumes or values, but the percentage change in production relative to that year.

The central bank calculates IPI using data of large units with 100 workers or more operating in 24 industries.

IPI stood at 96.3 during the first quarter of the current year. This is while it had registered notable growths during the preceding four quarters. In fact, the last fiscal year saw IPI grow 5.5% year-on-year to 105.5 with Q1 to Q4 signaling healthy growths of 5%, 6.5%, 4.42% and 5.7% respectively.

According to CBI data, from 24 major industrial operations, the production of 11 industrial fields, that constituted a 51.4% share of the added value of all industrial activities, increased during this year's Q1.

On the other hand, the production index of 13 industrial activities with a total share of 48.6% of added value declined in the same period.

Three major industrial activities, namely the manufacture of chemical materials and products, non-metal mineral products and pharmaceuticals, constituting a 38.2% share of total added industrial value, registered lower production.

In contrast, three major industrial activities, namely the manufacture of base metals, motor vehicles and foodstuff, representing a 42% share of total added industrial value, witnessed increased production.

Chemical material and products, Iran's biggest manufacturing industry in terms of added value with a 27% share, saw 1.9% IPI decline during this year's Q1. Base metal production, constituting the second biggest share of added value (20.1%), saw the IPI increase by 5.9%. Motor vehicles, trailer and semi-trailer manufacturing industries, third on the list of biggest providers of added value (13.28%), saw a 4% increase in IPI.

Overall, the three aforesaid industries constituted 80% of the added value of major industrial units during the first quarter of the current year alongside three other industries, namely the manufacture of foodstuff, non-metal minerals and pharmaceuticals.

In terms of IPI growth on a scale of 100, industries manufacturing tobacco products (22.8), recorded media (10.2) and base metals (5.9) registered the biggest increase.

While the production of base metal is a very important industry with a coefficient of 20.01, the former two were much less important with coefficients of 0.45 and 0.42 respectively.

On the other end of the spectrum, renovation and installation of machineries and equipment, as well as the manufacture of furniture, machinery and equipment not categorized elsewhere, registered the highest decline in terms of IPI on a 100-point scale. They respectively lost IPI points to the tune of 25.3, 23.7 and 20.6.

Nevertheless, they all had weak coefficients equal to 0.51, 0.18 and 2.59 respectively, and therefore did not sway the total IPI significantly.