Commerce is the quickest growing field in the economy. If favorable conditions are provided, the metaphorical tree of commerce will produce fruit sooner than other economic activities.
That’s why any improvement in commerce is manifested in economic and social indicators as well as the well-being of people at a rate faster than in other sectors. This was stated by Masoud Khansari, president of Tehran Chamber of Commerce, Industries, Mines and Agriculture, in an article for the Persian daily Donya-e-Eqtesad. A translation of the text follows:
With the temporary lifting of sanctions and improvement of conditions for commerce, Iran registered a historic double-digit economic growth, a significant decline in inflation (single-digit rates for two years) and better livelihood for the people. All these happened without carrying out reforms in other economic sectors and only as a result of freedom of commerce.
Obviously, sudden positive changes won’t be sustained without other sectors. For example, inflation should be contained through monetary policies and not injection of oil money. By extension, the imposition of restrictions on commerce influences the economy and lives of people.
In the fiscal 2018-19, following the US withdrawal from the nuclear deal and the reimposition of sanctions, economic growth plummeted, inflation jumped and per capita income and people’s livelihood declined. In short, the one step government can take to improve people’s lives is to facilitate trade through negotiations and removal of sanctions.
It is unfortunate that last year and even in the first half of the current year, we almost reached an agreement with the world but in the end failed to revive the Joint Comprehensive Plan of Action [the formal name of the Iran nuclear deal].
At present, disagreements between the parties have increased significantly due to other issues, such as the alleged use of Iranian drones by Russia in the war against Ukraine and the handling of protests at home. The private sector had repeatedly underlined the need to conclude negotiations as soon as possible, because as the talks prolong, the country incurs losses worth several hundred billion dollars on the back of the failure to sell oil while new disputes also emerge.
Repercussions of Sanctions
Sanctions lower Iran’s trade ceiling. Trade, limited to only neighbors and regional countries and with high foreign exchange costs that make us sell our products cheaply and buy expensively, cannot lead to a sustainable growth even if it improves a little with some regional deals.
In addition, Middle Eastern countries and our neighbors, at least our business partners, are politically and economically unstable. They are grappling with constant fluctuations, which deprive us of the possibility to make long-term investments.
Sanctions have increased business risks significantly, both for domestic economic players and foreign partners. Domestic unrests have worsened uncertainties and overshadowed the credibility of our exporters and importers in the global markets.
In fact, the significant decline in Iran’s exports and imports in terms of weight in the current year compared with last year shows that the 10% growth in trade, in which the share of imports is higher than exports, is most likely the result of the rise in the prices of goods in the global markets, following the Russia-Ukraine war. Sustainable economic growth, as you see in the case of China, depends on the development of trade by diversifying partners and exporting goods.
That, except for steel, our top 10 exporting items are petroleum products with a share of 42%, is the result of severe foreign and domestic restrictions that have not only made the country’s net investment negative but has also discouraged producers.
The improvement of the country’s foreign trade depends on the removal of sanctions, political stability and reforming the structure of domestic economy. Otherwise, the persistence of the current situation will dry the fruitful tree of commerce.
Let’s not forget that commerce is the fastest shortcut to development.
