New figures released by Islamic Republic of Iran Customs Administration show Iran’s non-oil foreign trade is recovering from a decline in the last fiscal year (ended March 2021).
Iran traded 38.4 million tons of non-oil goods worth $20.9 billion with foreign countries during the first quarter of the current fiscal year (March 21-June 21), indicating an increase of 7.7 million tons or 25% in weight and $7 billion or 50% in value compared with the corresponding period of last year.
According to Mehdi Mirashrafi, the head of the Islamic Republic of Iran Customs Administration, exports reached 30 million tons worth $10.7 billion, which shows a year-on-year growth of 38% and 69% in weight and value respectively, IRNA reported.
Main export destinations during the period under review included China with 7.1 million tons worth $3.1 billion, Iraq with 9.6 million tons worth $2.3 billion, the UAE with 3.4 million tons worth $1.3 billion, Turkey with 663,000 tons worth $595 million and Afghanistan with 1.4 million tons worth $570 million.
Q1 imports hit 8.4 million tons worth $10.2 billion, registering a 6% decrease in weight but a 34% increase in value compared with last year’s same period.
Main exporters to Iran during the period were the UAE with 2.5 million tons of goods worth $3.2 billion, China with 683,000 tons worth $2.2 billion, Turkey with 888,000 tons worth $1 billion, Germany with 239,000 tons worth $414 million and Switzerland with 472,000 tons worth $384 million.
Noting that Iran registered a $476 million trade surplus in Q1, the IRICA chief said a total of 2.74 million tons of foreign commodities were transported through Iran, indicating a 121% growth compared with last year.
“IRICA confiscated 5,300 billion rials [$22.08 million] worth of smuggled goods in the first three months of the current year,” he added.
Iran’s non-oil foreign trade declined from $85 billion in the fiscal 2019-20 ($41.3 billion worth of exports and $43.7 billion of imports) to $73 billion in the fiscal 2020-21 ($34.52 billion of exports and $38.5 billion of imports).
Latest statistics released by the Central Bank of Iran show that except in the month ending Oct. 21 and the one ending Nov. 20, Iran’s trade balance was negative every month last year.
The two aforementioned months experienced a trade surplus of $1.42 billion and $0.12 billion in respectively.
The highest export value was registered in the month to Oct. 21 with $4.67 billion weighing 19.26 million tons whikle the month to March 20 registered the highest import value worth $4.57 billion weighing 2.92 million tons.
The lowest exports and imports value were registered in the month to April 19 with $1.65 billion weighing 5.35 million tons and $1.93 billion weighing 2.53 million tons respectively.
According to the Trade Promotion Organization of Iran, there were four main reasons behind the decrease in Iran’s foreign trades in the fiscal 2020-21 compared with the years from the fiscal 2011-12 to 2013-14.
The first reason behind the decrease was the decline in oil revenues. Parts of raw material costs are supplied from oil revenues. The decline in revenues caused problems in the way of foreign exchange earnings and buying raw materials for export products. Therefore, it caused a decline in exports 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, the decline in foreign exchange reserves and the Covid-19 pandemic.
Alongside these problems, the Central Bank of Iran’s forex earnings law prevented some exporters from meeting the CBI requirements, so they stopped exporting their products and waited for the stability of currency market and forex laws.
The US sanctioned Iran’s petrochemical industries and 39 related institutions, and the US 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 price in fiscal 2020-21 alongside US sanctions, petrochemical products registered a decline in the period under review.
The coronavirus pandemic was another reason behind the significant decline in trade. The closure of borders, new standards for foreign trade and the wariness of other countries in exporting 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 shuttle between the 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 a likely agreement between the two countries and lifting of sanctions, obstacles such as the US sanctions may be removed and there is an opportunity for Iran to develop and increase its foreign trade.
