Iran traded 9.1 million tons of non-oil goods worth $5.02 billion with its 15 neighboring countries during the first two months of the current fiscal year (March 21-May 21).
Latest data released by the Islamic Republic of Iran Customs Administration show Iran’s non-oil exports to these countries amounted to 6.59 million tons worth $2.18 billion during the two months under review.
This is while imports stood at 2.56 million tons worth $2.83 billion, thanks to the resumption of business activities in some of the regional countries.
Iraq, Turkey, Afghanistan, Pakistan, Russia, Oman, Azerbaijan, Turkmenistan, Kuwait, Qatar, Kazakhstan, Armenia, the UAE, Bahrain and Saudi Arabia are Iran’s 15 neighboring countries.
The UAE was Iran's largest trading partner during the period, with $2.1 billion worth of bilateral trade. Turkey came next with $1.02 billion, followed by Iraq with $916.5 million and Russia with $280.7 million.
Iraq remained the leading destination for Iranian goods and commodities during the period. The country imported $865.6 million worth of goods from Iran. Turkey was the second largest market for Iranian products with $381 million worth of goods exported during the period under review.
Afghanistan was also among the top importers of Iranian goods, with $256.9 million. It was ranked after UAE with $264 million and above Pakistan with $90 million.
The UAE was the top exporter of goods to Iran during the period. The Persian Gulf state shipped $1.84 billion worth of goods to stand considerably higher than the other neighboring countries.
Turkey and Russia followed with $641.4 million and $184.8 million worth of exports to Iran, respectively.
27% of Total Foreign Trade
Iran’s total trade with other countries stood at 32.54 million tons worth $18.56 billion during the two months under review, indicating that trade with neighbors accounted for around 27% of the total sum.
In fact, the first two Iranian months witnessed a reversal from last year’s decline in foreign trade.
Iran’s foreign trade reached 22.2 million tons worth $12.8 billion in the month leading to May 21, indicating a 6.6% and 38% growth in weight and value respectively compared with the same period of last year, Mehdi Mirashrafi, the head of the Islamic Republic of Iran Customs Administration, said on Wednesday.
“A total of 16.9 million tons of non-oil goods worth $6.3 billion were exported. Gasoline, polyethylene, methanol, steel ingot and other steel products were Iran’s main exports during the one-month period [April 21-May 20],” he said.
“Exports increased by 17% in terms of weight and 48% in terms of value year-on-year. Top export destinations during the month under review were China with 4.6 million tons of non-oil goods worth $2 billion (up 17% in tonnage and 74% in value YOY), Iraq with 3.1 million tons worth $953 million (down 18% in weight and 13% in value), the UAE with 2.4 million tons worth $849 million (up 9% in weight and 25% in value), Turkey with 384,000 tons worth $388 million (up 14% in weight and 172% in value) and Afghanistan with 911,000 tons worth $365 million, indicating a decline of 14% in weight but an 8% increase in value,” he was quoted as saying by ISNA.
“Exports to these five countries amounted to 11.5 million tons of non-oil goods worth $4.6 billion. They accounted for 68% and 73% of Iran’s overall exports in terms of weight and value, respectively.”
Mirashrafi noted that imports reached 5.3 million tons worth $6.5 billion, indicating a 16.5% decline in weight but a 29.5% growth in value compared with the corresponding period of last year.
“Cellphones, corn, sunflower oil, soybean meal, wheat, soybeans, rice, barley, sugar and unprocessed soybean oil were Iran’s main imports last month. Imports of these 10 items totaled 3.7 million tons worth $2.1 billion and accounted from 69.5% and 33% of the country’s overall imports in terms of weight and value respectively,” he added.
Top exporters to Iran were the UAE with 1.4 million tons of goods with $1.8 billion, China with 461,000 tons of goods worth $1.5 billion, Turkey with 581,000 tons of goods worth $642 million, Germany with 156,000 tons of goods worth $285 million and Switzerland with 359,000 tons of goods worth $283 million.
Imports from the UAE rose by 114% and 181% in weight and value compared with the last year’s same month while imports from Turkey decreased by 48% in weight and 42% in value, imports from Germany dropped by 54% and 15% in weight and value respectively and imports from Switzerland surged by 2,642% in weight and 2,061% in value compared with the same month of last year.
“These five countries exported an aggregate of 2.96 million tons of goods worth $4.54 billion to Iran during the month under review to account for 55% of the country’s overall imports in weight and 70% of its imports in value,” the IRICA chief said.
“A total of 1.84 million tons of cargo were transited across the country during the second month of the current year, indicating a 142% increase YOY.”
Iran’s non-oil foreign trade in the first month of the current Iranian year (March 21-April 20) stood at 10.34 million tons worth $5.76 billion, indicating an increase of 32% and 62.5% respectively in weight and value compared with the corresponding period of last year.
According to IRICA, exports accounted for 8.3 million tons worth $2.96 billion and imports constituted 2.04 million tons worth $2.79 billion of the total sum.
Exports show an increase of 56% in weight and 80% in value while imports register a decline of 18% in weight, but an increase of 47% in value year-on-year.
Iran’s foreign non-oil trade stood at 145.7 million tons worth $73 billion in the last fiscal year (March 2020-21).
According to Mirashrafi, exports accounted for 112 million tons worth $34.52 billion and imports constituted 34.4 million tons worth $38.5 billion.
“Iran’s foreign trade reduced by 25 million tons due to sanctions and the Covid-19 pandemic,” he said, adding that the country’s trade deficit stood at $4 billion.
TPO on Decline in Fiscal 2020-21
There were four main reasons behind the decline in Iran’s foreign trade in the fiscal 2020-21 compared with the years from fiscal 2011-12 to 2013-14, according to the Trade Promotion Organization of Iran.
The first reason behind the decrease was the decline in oil revenues. Parts of raw material costs are supplied from the oil revenues. The decline in revenues caused problems in exporting raw materials; therefore, it caused a decline in export volume during the period.
Currency shock is another reason behind the decline. One of the main variables affected by currency shocks is non-oil exports. Iran’s currency market faced an unpredicted shock in the fiscal 2020-21 due to the intensification of US sanctions, decline in foreign exchange reserves and the Covid-19 pandemic. Alongside these problems, the Central Bank of Iran’s forex earnings law made some exporters unable to meet the CBI requirements, so they stopped exporting their products and waited for stability in the currency market and forex laws.
The US sanctioned petrochemical industries and 39 related institutions, and its Department of Treasury banned transactions, purchases, credit and insurance services to Iran by other countries. Oil prices also impact petrochemical export and due to the low oil prices in the fiscal 2020-21 alongside the US sanctions, petrochemical products registered a decline in the period under review.
The coronavirus pandemic was another reason behind the significant decrease in trade. Closure of borders, new standards for foreign trade and other countries’ restraint in exporting products, especially of agricultural and food products, caused a decline in Iran’s foreign trade.
Iran and the US are holding indirect negotiations on a return to compliance to the 2015 Iran nuclear deal, formally known as the Joint Comprehensive Plan of Action.
Representatives of Britain, China, France, Germany, Russia and European Union are shuttling between US and Iranian delegations. JCPOA limited the scope of Iran's nuclear program. In return, the Islamic Republic received relief from US and international sanctions.
Washington walked out of the deal under the administration of former president, Donald Trump.
With the likely agreement between the two countries and lifting of sanctions, some of these obstacles such as US sanctions may be removed and there is an opportunity for Iran to increase its foreign trades.
