Iran’s exports to Iraq during the first four months of the current Iranian year (March 21-July 22) registered a 15% decline compared with the similar period of last year.
The secretary-general of Iran-Iraq Chamber of Commerce says there are three main reasons for the decline, with the main one being import restrictions set by Iraqi authorities.
“Every year, Iraq imposes a seasonal import ban on certain products with the aim of supporting domestic production. These are mainly agricultural products. Usually in the second half of the year when these restrictions are lifted, our exports to this western neighbor increases,” Jahanbakhsh Sanjabi Shirazi was also quoted as saying by Fars News Agency.
The official noted that during the four months under review, Iran exported a total of 6.93 million tons of goods to Iraq worth $2.39 billion.
“Another reason for the decline in exports to Iraq during the period is the inflation in Iran caused by the removal of import subsidies, which has increased the prices of exports,” he added.
Referring to the Central Bank of Iran’s mandate on exporters to sell their earnings to the government at lower rates compared to the open market prices, he said this discourages exporters.
“Other reasons include requiring traders to use the rial instead of dollar in transactions, and lastly the fact that Iraq’s oil revenues have increased, expanding the country’s import market. This has made many other countries enter the Iraqi market to rival Iranian exporters,” he said.
Around 73% of Iran’s tile and ceramic exports go to the neighboring Iraq, according to the head of the National Tile and Ceramic Producers Guild Association.
“This is both an opportunity and a threat to our exports. We plan to keep our foothold in the Iraqi market but we also need to expand our export destinations. We are currently taking measures to include African counties in our export list,” Morteza Safdarizadeh was also quoted as saying by Fars News Agency.
Bilateral Trade
Iran and Iraq traded 25.93 million tons of goods worth $8.64 billion since Ebrahim Raisi took office as Iran’s president on August 23, 2021, until June 21, 2022, Rouhollah Latifi, spokesman of the Islamic Republic of Iran Customs Administration, said recently.
He made the statement on the occasion of Iraqi Prime Minister Mustafa Al-Kadhimi’s visit to Iran.
Al-Kadhimi had led a political and economic delegation from the neighboring country.
Customs data indicate that Iran’s exports to Iraq stood at 23.52 million tons worth $7.58 billion during the 10-month period, while Iran imported 2.42 million tons worth $1.06 billion, IRNA reported.
“Historical, cultural and religious commonalities between Iran and Iraq and the development of bilateral political and economic relations have increased Iran's non-oil exports from $145 million in the fiscal 2001-02 to $9 billion in the fiscal 2019-20. And again. Last year’s [2021-22] exports hit 30 million tons worth $8.92 billion. In recent years, Iraq has become the second-largest export destination of Iranian goods in the world and the top destination among Iran's neighbors,” Latifi said.
He explained that Iran registered its first jump in exports to Iraq in the fiscal 2005-06 with $1.22 billion worth of shipments, which figure reached $2.76 billion in the following years.
“Exports surged to $4.56 billion in the fiscal 2009-10, $6.34 billion in the fiscal 2012-13 and $8.99 billion in the fiscal 2018-19,” he said.
“Iran’s imports from Iraq, which mostly included essential goods, reached a record high of 2.7 million tons of goods worth $1.2 billion in the last Iranian year [March 2021-22].”
Iran's total imports during 2000-20 stood at 1.31 million tons worth $1.33 billion. In other words, import in the fiscal 2021-22 was more than the volume registered during the two decades.
Agricultural and food products, construction materials, petroleum products, electronics, medical equipment and medicine, automobiles and spare parts, clothing, bags, shoes, iron products and nuts were the main goods exported from Iran to Iraq.
Essential goods such as wheat, barley, oil, corn, soybean, rubber, paper, and cereals along with machinery, scrap metal, home appliances, electronic equipment and measuring devices were among the most important goods imported from Iraq last year.
Kermanshah in western Iran shares around 371 kilometers of borders with Iraq and the Iraqi Kurdistan Region.
The province accounts for around half of Iran’s annual non-oil exports to Iraq.
