Disruptions in international flights will seriously damage Iran's economy. Vahid Shaghaghi Shahrabi, an economist, in his analysis of the consequences of this disruption on foreign trade, supply chains, and import costs, pointed to its dangerous impacts on the economy. This disruption can go beyond a simple change in the transportation of goods and turn into a serious shock for the real sector of the economy.
Effects of the air blockade on the supply chain
Shaghaghi Shahrabi further referred to the effects of this disruption on the supply chain and said: "Currently, disruptions in air routes, beyond changing the goods transportation matrix, can cause a negative supply shock and imbalance in the markets for goods, money, and currency." According to him, the share of air transport in the physical volume of foreign trade of countries is low, but more than one-third of the value of industrial trade and modern intermediary imports relies on air transit.
Read more: The shortage of diesel and jet fuel will lead to a deeper crisis than the Iran war
These items include physical capital data, semiconductors, and medical equipment that are vital and irreplaceable in production. The lack of these items can halt the production lines of industrial units and cause serious damage to the production chain.
Increase in import costs and its impacts
Vahid Shaghaghi Shahrabi also referred to the change in transportation methods from air to land and sea and its consequences on the economic costs of businesses. He said: "The forced change in transportation method increases the delivery time of goods from days to months, and this issue leads to a surge in storage costs and capital being tied up."
This economist emphasized that the increase in logistics costs is not limited to a linear increase in freight rates but can lead to an increase of 40 to 120 percent in the delivery cost of each unit of technological goods. He added: "These costs are passed on to the prices of goods and behave differently in various markets depending on the price elasticity of demand."
According to Shaghaghi Shahrabi, the pharmaceutical and medical markets will experience a faster inflationary spillover due to the severe demand pressure, while in the intermediary goods sector, the transfer of costs to the final consumer occurs with a delay and a decline in profit margins.
Ultimately, the effects of this situation on the country's foreign exchange revenues and the currency market are also significant. The decrease in tourist arrivals and the limitation of aviation services can severely affect the country's balance of payments. Shaghaghi Shahrabi emphasized that with the suspension of flight routes, the inflow of foreign currency will sharply decline, which could lead to an increase in the exchange rate in the informal market.
In summary, disruptions in air flights and the economic blockade can exert serious pressures on the supply chain, import costs, and the currency market in Iran, and if continued, its effects will be severely evident on the real sector of the country's economy.
Read more: Mazandaran Gas Company has started a plan to cut gas to unoccupied villas · Oil industry firefighters are on the front line of safety for oil facilities
