Iran's Q4 Guild Sales Slip by 83%

EghtesadOnline: Guilds across the country registered an 83% decline in sales during the fourth quarter of the last fiscal year (Dec. 21, 2019-March 19, 2020) compared with Q4 of the year before.

News ID: ۷۴۹۹۲۳

28 April 2020

All guilds reported significant declines of 67-98% in sales during the period year-on-year.

The telephone survey was taken from 414 licensed business owners affiliated to Iran Chamber of Guilds between March 20 and April 3.

Sales by shoe and bag guilds tumbled by 98%, textile and clothing 92% and sales of stationery and print guild dropped by 86% YOY.

The so-called "low-risk" businesses affiliated to Tehran Chamber of Guilds reopened on April 18 to resume activities as per the Smart Distancing Initiative to tackle the COVID-19 outbreak while minimizing its economic fallout.

Indoor shopping malls reopened in the capital on April 20.

According to a Health Ministry announcement, "high-risk" workplaces such as cultural and sport centers, beauty salons and hotels are to remain closed until further notice.

As per the initiative, low-risk businesses were allowed to resume activities on April 11 in all provinces, except Tehran, which followed suit on April 18.

Speaking on the effect of the new coronavirus on businesses, Government Spokesman Ali Rabiei said, "The early impacts of unemployment can be seen in 10 business groups that were closed as soon as the virus was confirmed. Close to 3.3 million of the employed population in the official economy are directly affected by the crisis."

22% YOY Decline in Production

The survey results show that production by Iranian guilds reduced by an average of 13.4% in Q4 compared with the preceding quarter (Sept. 22-Dec. 20, 2019) and 22.2% over the same quarter of the year before (Dec. 22-March 20, 2019).

The sharpest decline in production was registered for stationery and print guild with 24% over Q3 and 32% over the Q4 of 2018-19. All eight guilds surveyed posted a 1-24% decrease in production during Q4 compared with Q3 amid the outbreak of coronavirus.

The International Monetary Fund estimates that Iran's economy shrank by -7.6 in 2019.

In its latest World Economic Outlook report entitled "Chapter 1: The Great Lockdown", IMF expects the real GDP to register a 3.1% growth next year after a contraction of -6% in 2020.

"The COVID-19 pandemic is inflicting high and rising human costs worldwide. Protecting lives and allowing healthcare systems to cope have required isolation, lockdowns and widespread closures to slow the spread of the virus. The health crisis is, therefore, having a severe impact on economic activity," reads the report's executive summary.

“As a result of the pandemic, the global economy is projected to contract sharply by –3% in 2020, much worse than during the 2008–09 financial crisis. In a baseline scenario, which assumes that the pandemic fades in the second half of 2020 and containment efforts can be gradually unwound, the global economy is projected to grow by 5.8% in 2021 as economic activity normalizes, helped by policy support.”

5.2% YOY Decline in Employment

The Majlis Research Center's survey also shows employment reduced by 3.7% over Q3 and 5.2% compared with the same quarter of the year before. None of the guilds posted declines over 9% compared with Q3 and the same quarter of fiscal 2018-19.

The sharpest drop in employment was registered for textile and clothing: a 7% and 9% decline compared with THE Q3 and Q4 of 2018-19, respectively. Interestingly, handicrafts and carpet industries posted a 5% and 2% improvement in employment compared with THE Q3 and Q4 of 2018-19.

Prices of products manufactured by the guilds increased by 10.3% compared with the Q4 of 2018-19.

“About 600,000 of people have filed for unemployment because of the coronavirus pandemic in the past 20 days,” Hojjat Mirzaie, an official with the Ministry of Cooperatives, Labor and Social Welfare, said earlier in April.

These people were mostly employed in the services sector, he added.

Rabiei said the economy could lose up to four million jobs.

In early April, Masoud Babaie, an official with the Cooperatives Ministry, said the government would allocate 50,000 billion rials ($312 million) to Unemployment Insurance Fund to support those who have lost their jobs amid the outbreak of coronavirus, IRNA reported.

“As per a joint guideline signed by the Cooperatives Ministry and the Social Security Organization on March 30, workers of 10 job groups and economic subsectors that have been hit by coronavirus outbreak and are subject to the provisions of the Islamic Republic of Iran Labor Law, the Social Security Act and the Unemployment Insurance Law will qualify to receive unemployment benefits for three months,” he said.

The official noted that other policyholders, such as those who have insurance granted to the self-employed, construction workers and carpet weavers were not eligible for unemployment benefits.

Earlier, the Central Bank of Iran released a list of businesses that have been directly affected by the outbreak of the novel coronavirus, the COVID-19. These businesses can apply to receive bank support and facilities.

The list includes food preparation and distribution outlets, including restaurants, teahouses and other such centers; tourism centers, including hotels, inns, hostels, road recreation and service providing centers and other such businesses identified by the Industries Ministry; air, rail and road forwarders whether inter- or intra-city; apparel production and distribution units; bag and footwear production and distribution units; distributors of nuts and dried fruit, confectioneries, ice cream and juice; sport, recreational, cultural and educational centers; and handicraft production and distribution centers, ILNA reported.

Iran’s unemployment rate, the proportion of jobless population of ages 15 and above, stood at 10.6% in the fourth quarter of the current Iranian year (Dec. 22, 2019-March 19), indicating a 1.7% decline compared with the same period of last year.

These figures were calculated between Feb. 1-14, before the outbreak of coronavirus, when the labor market was in better shape, the latest report by the Statistical Center of Iran reads.