The government should open the way for the private sector to import The new wave of inflation and the possibility of shortage of goods in the market

The outlook of Iran's economy in the second half of 1405 is accompanied by concern about the increase in prices and the difficulty of supplying some goods. The head of the Investment and Financing Commission of the Iran Chamber says that an increase in the exchange rate can increase the cost of imports and put more pressure on the market of essential goods and electronic equipment.

Messiah Heydarian; Iran's economic outlook in the second half of 1405 is associated with concerns about inflation, production, foreign trade and purchasing power of households. The continuation of trade and currency restrictions, along with the difficulty of supplying goods and equipment needed by companies, can make economic activity face more challenges. Therefore, the way of managing foreign exchange resources and the extent of using the capacity of the private sector to meet the needs of the country becomes more important.

The new wave of inflation and the possibility of shortage of goods in the market

Farshid Shekarkhodaei, head of the Investment and Financing Commission of the Iran Chamber, in a conversation with Ambassador Arjan, predicting the continuation of inflation and the decline of GDP in the second half of 1405, said: Iran's economy will probably face another wave of inflation and the decline of GDP can continue. If the export and import situation of the country is not thought out in the shortest possible time, the possibility of shortage of some goods in the domestic market will increase.

Referring to the impact of trade restrictions on the supply of domestic needs, Shekarkhodaei said: If import and export problems continue, there is a possibility of a shortage of some essential items, including medicine, sugar, and livestock inputs. Efforts are underway to supply livestock inputs from the northern routes of the country, but the volume of imports from these routes may not be sufficient to meet all market needs.

The head of the Investment and Financing Commission of the Iran Chamber emphasized the connection between the increase in the exchange rate and the production costs and added: the increase in the exchange rate increases the cost of supplying raw materials and equipment, and the effects of this cost increase are gradually visible in the production and service sectors. The growth of production and service costs can also increase the cost of goods and put more pressure on consumers.

Referring to the consequences of inflation on domestic demand, he emphasized: a sharp increase in prices reduces the purchasing power of households and may discourage consumers from buying some goods. The decrease in consumption, along with the increase in production costs, limits the activity of economic enterprises and can have a negative effect on the process of gross domestic product.

Shekarkhodaei also warned about the possibility of reducing consumers' access to needed goods and said: if the problems of import and supply of goods are not solved, the domestic market may face the limitation of the supply of some products in addition to the increase in prices. Therefore, the management of foreign trade and timely supply of essential goods will be one of the important issues of Iran's economy in the coming months.

The increase in the price of the dollar makes the central bank's anti-inflationary policy a challenge

Referring to the impact of the exchange rate increase on the country's monetary policies, the head of the Investment and Financing Commission of the Iran Chamber pointed out that the central bank's contractionary policies are aimed at curbing inflation, but an increase in the exchange rate can make it more difficult to achieve this goal. The growth of the exchange rate by increasing the cost of imports, raw materials and intermediate goods, aggravates inflationary pressures and may reduce the effectiveness of anti-inflationary policies.

Referring to the issue of inflation control, he added: In a situation where the cost of supplying imported goods increases, inflation control will not be possible only by limiting liquidity and applying contractionary policies. Managing the foreign exchange market, facilitating imports and reducing barriers to supply goods is also important to control price pressures.

Is the jump in the price of mobile phones, laptops and electronic equipment coming?

Pointing to the dependence of the electronic equipment market on imports, Shekarkhodaei said: the prices of goods such as mobile phones, laptops, servers and other electronic equipment may face a further increase. The goods that have previously entered the country with lower exchange rates will be replaced by new inventory, the cost of which will be calculated with higher exchange rates.

By comparing the exchange rate used in previous imports and the cost of new supply of goods, the head of the Investment and Financing Commission of Iran Chamber explained: Some of the goods in the market are imported with a dollar price of around 140 to 150 thousand tomans, but providing new shipments with rates of around 240 to 250 thousand tomans can greatly increase the cost of imports. As a result, the electronic equipment market will face more upward pressure on prices.

Referring to the dependence of industries on specialized parts and equipment, he added: The increase in the cost of imports is not limited to consumer goods and can affect the activities of factories and production workshops as well. Electronic boards and sensitive parts used in production lines are among the equipments whose supply is very important for the continuation of the activity of some industrial units.

Emphasizing the impact of restrictions caused by sanctions and disruptions in product supply routes, Shekarkhodaei noted: Part of the equipment needed by industries was supplied from foreign routes, and restrictions on these routes can cause economic enterprises to face challenges. Although the land routes in the north of the country are still active, the possibility of restrictions on these routes should also be considered in business planning.

The government should open the way for the private sector to import goods

Referring to the necessity of changing the way of managing the economy in critical conditions, the head of the Investment and Financing Commission of the Iran Chamber stated: To deal with economic pressures and disruption in the supply of goods, the capacity of the private sector should be used more. Facilitating the activities of merchants and providing the possibility of faster import of goods needed by the country can reduce some of the existing problems.

Criticizing the import administrative obstacles, he added: It is expected that in difficult economic conditions, unnecessary restrictions on the import path will be removed and private sector activists will be allowed to use their capacities to provide the goods needed by the country. But there are still not enough signs of facilitating business processes and giving more authority to the private sector.

Referring to the concentration of foreign exchange and business decisions in government institutions, Shekarkhodaei noted: When the allocation of currency and an important part of import processes depend on the decisions of government institutions, the speed of reaction of economic actors to market changes decreases. In such a structure, traders have to go through several administrative steps to supply goods, and this issue can slow down the process of goods entering the country.

Criticizing the performance of the administrative structure of the country's economy, he stated: the result of the policies and activities of the responsible institutions should be reflected in the improvement of economic indicators and facilitating people's access to goods. According to him, the continuation of the current situation and increasing pressure on the currency market show that it is necessary to review the country's economic management method.

trust in the private sector; A solution to deal with the economic crisis

The head of the Investment and Financing Commission of the Iran Chamber emphasized the necessity of changing the government's approach towards the private sector and said: One of the ways to improve the economic conditions is to trust more private sector activists and open the way for their activities. The government should allow capable merchants and producers to use their resources, experience and business networks to supply goods and reduce pressure on the domestic market.

While emphasizing more on the issue of the government's trust in the private sector, he added: In a situation where the country is facing trade restrictions and increased costs of supplying goods, relying on centralized administrative mechanisms can reduce the speed of decision-making and program implementation. On the other hand, using the capacity of the private sector and reducing obstacles to economic activity can provide the possibility of a faster response to shortages and market changes.

Referring to the structural obstacles facing the economic reforms, Shekarkhodaei noted: the implementation of facilitating policies is facing resistance in the administrative structure and stakeholder networks. When business processes depend on multiple authorizations and decisions, and when different groups have an interest in maintaining existing procedures, it becomes more difficult to change the structure and increase the freedom of action of economic actors.

A member of the delegation of the Iranian Chamber of Deputies, while summarizing the prospects of Iran's economy in the second half of 1405, emphasized: the continuation of currency and trade problems can lead to an increase in inflation, a decrease in production, and a limitation in the supply of some goods. On the other hand, facilitating imports, reforming the currency management method and trusting more in the private sector are measures that can help reduce economic pressures and improve the supply of goods in the country.