The Impact of Iran’s Industrial PMI Decline on Foreign Trade with Focus on the Russian Market

The Purchasing Managers’ Index (PMI) is one of the most important key economic indicators, providing a comprehensive assessment of the country’s industrial and manufacturing activity. By analyzing new orders, production levels, inventory status, and production outlook, the PMI offers valuable insights into the performance of business enterprises. A decline in this index typically indicates a reduction in new orders, limitations in raw material supply, and lower production expectations in the near future.

In August 2025 (Mordad 1404), PMI analysis shows a downward trend in all three aforementioned factors in Iran’s industrial sector. This trend reflects a slowdown in manufacturing activities and increasing pressure on businesses to maintain production and exports.

Production Analysis

According to the PMI report, industrial enterprises in the country are facing multiple significant challenges:

• Rising raw material costs: Price fluctuations in domestic and international markets have increased production costs.
• Decreasing domestic demand: Reduced consumer purchasing power and economic constraints have lowered internal orders, leading to overcapacity in some sectors.
• Liquidity problems: Limited access to financial resources and credit lines has constrained development and investment plans.

If this trend continues, it may reduce production capacity in export-oriented industries, limiting Iran’s ability to maintain a stable presence in regional and international markets.

canjoo
canjoo

Impact on Exports to Russia

In recent years, Russia has been one of the key destinations for Iran’s non-oil exports. However, the PMI decline and signs of a slowdown in the industrial sector have negatively affected the supply chain of export goods:

• Reduced production in key industries such as food, petrochemicals, and construction materials has limited the supply of products in the Russian market.
• Rising international transportation and energy costs have weakened the price competitiveness of Iranian goods compared to competitors, especially Turkey and China.
• Exchange rate volatility has increased the risk of long-term commercial contracts between Iran and Russia, reducing exporters’ and importers’ confidence.

Collectively, these factors place pressure on Iran’s ability to maintain its share in the Russian market.

canjoo
canjoo

Impact on Raw Material Imports

Simultaneously with reduced production, imports of raw materials and industrial machinery have slowed. This issue is particularly critical in industries highly dependent on imported inputs, such as food packaging and chemical industries, making production and exports increasingly vulnerable.

Raw material shortages can lead to production stoppages, reduced product quality, and higher production costs, directly affecting the competitiveness of Iranian goods in export markets.

canjoo
canjoo

Conclusion and Recommendations

Analysis of the August 2025 PMI data indicates that the country’s industrial economy is in a fragile condition. This situation may threaten the continuity of export growth to Russia and other target markets.

To improve the situation and strengthen Iran’s position in international markets, the following measures are recommended:

1. Facilitate the import of raw materials and industrial equipment for export-oriented industries by reducing tariffs and streamlining customs procedures.
2. Establish dedicated credit lines to support exporters to Russia and other key markets, especially in times of currency fluctuations and rising production costs.
3. Improve transport infrastructure along the North–South Corridor and other logistical routes to reduce transportation costs and accelerate goods delivery.
4. Strengthen cooperation with the Eurasian Economic Union to stabilize preferential tariffs and facilitate trade, increasing contract security and reducing commercial risks.
5. Continuously monitor the PMI and key economic indicators to enable precise planning and timely.

Implementing these measures will help Iran mitigate the effects of industrial slowdown, preserve export capacity, and reinforce its position in target markets, including Russia.

Source

📘 Source: Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) – Industrial PMI Report, August 2025.