Iran’s neighboring countries accounted for about half of its total non-oil trade in the last fiscal year (ended March 20, 2021), data released by the Islamic Republic of Iran Customs Administration show.
Iran traded $36.45 billion worth of non-oil goods with its 15 neighboring countries, namely the UAE, Iraq, Turkey, Afghanistan, Pakistan, Russia, Oman, Azerbaijan, Turkmenistan, Kuwait, Qatar, Kazakhstan, Armenia, Bahrain and Saudi Arabia, in the year under review.
Non-oil trade with neighbors posted a decline compared with the preceding year’s $40 billion.
Iran’s exports to its neighbors totaled $20.35 billion in the fiscal 2021-22, indicating a $4 billion decrease in value while imports amounted to $16.09 billion, remaining unchanged year-on-year.
UAE Tops List of Neighboring Trading Partners
The UAE was Iran’s leading trade partner among neighboring states, with $14.4 billion worth of non-oil exchanges.
“Our exports to the neighboring country hit 15.27 million tons worth $4.62 billion, showing a 27% and 6.5% rise in volume and value respectively YOY. These exports account for 13.6% and 13.4% of Iran’s total exports over the period under review. The country was Iran’s third biggest export destination after China and Iraq,” Rouhollah Latifi, the IRICA spokesman, was quoted as saying by the news portal of Iran Chamber of Commerce, Industries, Mining and Trade, Otaghiranonline.ir.
The official noted that the main exported goods included seafood, flower, fruit and vegetable, nuts, dried fruit, saffron and other spices, chocolate and pastry, fruit juice, vinegar, construction materials, cement, minerals, floorings, carpet, apparel, footwear, handicrafts, steel products, doors and windows, kitchen utensils, industrial machinery, light bulbs, furniture, musical instruments, medical equipment, electric and electronic devices, auto spare parts, packaging machinery and wickerwork.
“We imported close to 5.07 million tons of goods from this southern neighbor, worth $9.65 billion. The figures account for 15% and 25% of Iran’s total imports during the year under review respectively. The UAE was the second biggest exporter to Iran after China,” Latifi said.
According to the IRICA spokesman, Iran’s main imports from the UAE over the period were tropical fruit, livestock, pulses, coffee and cocoa, spices, rice, barley, oilseeds, edible oils, tobacco, minerals, industrial oils and raw materials, health supplements, medical and dentistry equipment, glue, paper and cardboard, tire production’s raw materials, fabric and thread, packaging raw materials and machinery, steel products, automatic doors, elevators, bolts and nuts, auto spare parts, road construction and industrial machinery, and sports equipment.
“Iran had set the goal of increasing exports to the UAE to $6 billion in the year ending March 2020 and $7 billion in the year ending March 2021; none of these goals was achieved. Our actual exports to the neighboring country stood at $4.5 billion in the year ending March 2020. Iran has set its export target at $8 billion for the fiscal 2021-22. There are multiple barriers in the way of reaching this goal,” Farshid Farzanegan, chairman of Iran-UAE Chamber of Commerce, said before the new Iranian year (started March 21).
According to the official, these barriers include the Central Bank of UAE’s strict policy regarding Iranians’ banking accounts, inefficiency of Iran’s road transport, particularly that of refrigerated containers, and lack of infrastructures for cold storage of agricultural products. “Countless trade rules and regulations are constantly shifting. Iran-UAE trade would improve, had there been stability in terms of laws,” he added.
Farzanegan noted that facilitating visits by economic operatives, improving banking ties, holding permanent exhibitions and employing active economic diplomacy regarding the UAE, Bahrain and Saudi Arabia, which have an import capacity of $135 billion, will help improve trade.
“As we speak, Iranian products enter Saudi Arabia through the UAE and Oman,” he added.
The official further said the launch of Economic Department as well as Industry and Trade Department at Iran’s Embassy in the UAE and efforts for boosting tourism would be helpful.
“We at Iran-UAE Chamber of Commerce are all set to transfer our data and information to these departments. Afghanistan is now exporting Iranian handicrafts and saffron to the UAE,” he said.
Noting that Iran needs to approve laws related to the standards of Financial Action Task Force, Farzanegan said, “Iran’s blacklisting by the global watchdog has disrupted trade with the UAE.”
Other Major Partners
Following the UAE in the list of Iran’s trade partners among neighboring countries were Iraq with $7.58 billion, Turkey with $6.9 billion, Afghanistan with $2.31 billion and Russia with $1.53 billion.
Pakistan and Oman followed with $1.17 billion and $871 million, respectively.
Iranian goods and commodities worth $7.44 billion were exported to Iraq, placing the country at the top of the list of Iran’s export destinations among neighboring states.
The UAE, Turkey and Afghanistan came next with $4.66 billion, $2.53 billion and $2.3 billion, respectively.
The UAE, with $9.75 billion, accounted for the largest share of Iran’s imports from neighboring countries during the period. Turkey followed with $4.39 billion worth of goods to Iran. Russia with more than $1.03 billion worth of goods exported to Iran came next.
Iran’s total foreign non-oil trade stood at 145.7 million tons worth $73 billion in the last fiscal year (March 2020-21), suggesting that neighboring countries accounted for about 50% of the total trade volume.
According to Mehdi Mirashrafi, the head of the Islamic Republic of Iran Customs Administration, exports accounted for 112 million tons worth $34.52 billion and imports constituted 34.4 million tons worth $38.5 billion of the sum.
Iran’s main exports included gasoline, natural gas, polyethylene, propane, and pistachio, with the latter alone earning $1.2 billion.
“The main export destinations were China with 26.6 million tons worth $8.9 billion of imports from Iran, Iraq with 25.6 million tons worth $7.3 billion, the UAE with 15.2 million tons worth $4.6 billion, Turkey with 6.3 million tons worth $2.5 billion and Afghanistan with 7 million tons worth $2.2 billion. These five countries imported more than 80 million tons of non-oil goods worth $25.7 billion,” he was quoted as saying by Mehr News Agency.
China, Iran’s biggest trading partner, accounted for 26% of Iran's total non-oil exports, as 26.58 million tons of non-oil goods worth $8.95 billion were shipped from Iran to China during the period. Pistachio, nuts, minerals, construction materials, methanol, carpet, iron ore, glassware and fruits were the main commodities exported from Iran to China in the last fiscal year.
Imports from China totaled 3.54 million tons worth $9.76 billion during the year to March 20, 2021, accounting for 10.6% of the total volume of Iran's imports and 25.3% of the total value of imports during the period. Industrial machinery and raw materials, medical equipment, paper, wood, textile, auto parts and sports equipment were Iran's main imports from the South Asian state in the fiscal 2020-21.
“Iran’s foreign trade declined 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.
Import of Essential Goods
Mirashrafi noted that a total of 23.1 million tons of essential goods, including corn, cellphones, rice, soybean meal, oilseeds, wheat and unprocessed oils, worth $12 billion were imported during the period under review.
Iran imported 3.5 million tons of essential goods worth $9.7 billion from China, 5 million tons worth $9.6 billion from the UAE, $4.3 billion from Turkey, 2.2 million tons worth $2.1 billion from India and 1.2 million tons worth $1.8 billion from Germany in the year to March 20.
Also known as necessity goods, essential goods are products consumers will buy, regardless of changes in income levels.
As part of the budget bill for the current fiscal year that began on March 21, the exchange rate for subsidized imports of essential goods remains unchanged at 42,000 rials per dollar.
However, according to Mojgan Khanlou, a senior official with the Plan and Budget Organization of Iran, the government is allowed to gradually discontinue the allocation of subsidized forex to import essential goods during the first half of the fiscal 2021-22.
The ongoing restrictions or total ban on imports of 2,500 types of commodities will continue even if sanctions against Iran are lifted, says Minister of Industries, Mining and Trade Alireza Razm-Hosseini.
“These measures are aimed at giving a boost to domestic production,” he was quoted as saying by IRNA.
“Production of parts in many industries have been localized such that domestic manufacturers account for 75% of home appliances and 80% of car production.”
Monthly Perspective
Iran’s non-oil foreign trade stood at $7.45 billion in the month ending March 20 compared with $6.81 billion in the preceding month, indicating a $641 million or 9.4% increase month-on-month, the spokesperson of the Islamic Republic of Iran Customs Administration said.
Non-oil exports hit $3.32 billion and imports reached $4.13 billion, indicating a month-on-month increase of 6% and 12% respectively.
“Top export destinations during the month under review were China with 2.06 million tons of non-oil goods worth $855 million, Iraq with 1.56 million tons worth $516 million, the UAE with 1.29 million tons worth $454 million, Turkey with 422,000 tons worth $281 million and Afghanistan with 571,000 tons worth $199 million,” Latifi was quoted as saying by IRNA.
Exports to China increased by 20% in tonnage and 1% in value compared with the previous month, exports to Iraq increased by 8% in value, exports to the UAE jumped by 11% in weight and 3% in value, exports to Turkey increased by 155% in weight and 35% in value, and exports to Afghanistan improved by 7.5% in value month-on-month.
“Exports to these five countries amounted to 5.91 million tons of non-oil goods worth $2.3 billion. They accounted for 64% of Iran’s total exports in terms of weight and 69% of the country’s overall exports in terms of value,” he said.
Iran’s top trading partners in imports were the UAE with 551,000 tons of goods worth $1.19 billion, China with 301,000 tons of goods worth $965 million, Turkey with 436,000 tons of goods worth $506 million, Germany with 97,000 tons of goods worth $172 million and India with 99,000 tons of goods worth $138 million.
Imports from the UAE rose by 48% in weight and 13% in value compared with the preceding month while imports from China decreased by 2% in weight and increased by 6% in value, imports from Turkey went up by 21% in weight and 18% in value, imports from Germany decreased by 48% in weight and 18% in value, and imports from India dropped by 55% in weight and 31% in value month-on-month.
Latifi announced that these five countries exported 1.48 million tons of goods worth $2.97 billion to Iran during the month under review to account for 56% of the country’s total imports in weight and 72% in value.
