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Domestic Economy

Call for Diversity in Export Goods, Markets

Trade reports published in Iran only survey non-oil exports. The country’s oil statistics are not available; therefore, speaking of trade surplus and deficit seems unprofessional. 

Given the level of Iran’s oil sales, a negative trade balance is unlikely. News by international oil and shipping organizations (as well as Iranian sources) indicates that Iran is selling more than 800,000 barrels of oil per day. Putting the estimated price of oil at an annual average of $80, Iran generated $22-23 billion in oil income. 

If we add this number to non-oil export revenues, the country’s trade balance will be positive. These were stated by Majid Reza Hariri, chairman of Iran-China Chamber of Commerce, in an article for the Persian daily Ta’adol. A translation of the text follows:

Lack of transparent statistics on oil exports results in statistical confusion. We should not forget that over 70-80% of our “non-oil” exports are in fact petroleum products, natural gas, gas condensates and petrochemicals. In other words, even our “non-oil” exports are petroleum products. 

At present, Iran does not have any non-oil product among the six top categories of its export basket. In the 10 categories of exports, only steel is non-petroleum, the rest of Iran’s commercial goods are all derived from oil. I believe that even steel is a petroleum commodity; if energy subsidies are removed and Iran’s steel is produced at global energy prices, it will lose its export advantage. 

 

Over 70-80% of our “non-oil” exports are in fact petroleum products, natural gas, gas condensates and petrochemicals. In other words, even our “non-oil” exports are petroleum products

The mere fact that trade balance is positive or negative is neither a value nor an anti-value. The important issue is whether Iran’s exports have increased or decreased compared with previous years. 

Statistics by the Islamic Republic of Iran Customs Administration show no growth in Iran’s exports that account for one-third of imports. In other words, if we export $1,000, we can import $250 worth of goods. Iran’s non-oil exports have decreased by more than 16% in terms of weight compared with the same period of last year. For the same reason, imports have dropped by 5%, but their value has increased by 17% compared with previous years. Therefore, one should not rely on these statistics and make policies accordingly.

Not everything is that bleak; a series of measures are being taken by the government of Ebrahim Raisi, which are positive. The government has focused on neighboring markets whose trade is not high if you consider them individually, but together they amount to a significant level. Central Asian and Eurasian countries and Pakistan are among important markets. There are Latin American and African countries as well. Will these positive measures be manifest in the statistics? The answer is no. It is still too early for making such evaluations. 

The markets on which the government has focused for less than a year are not going to have an impact on Iran’s commercial statistics quickly. But the direction taken is good and soon the effects will become apparent. The new destinations will be added to Iran’s traditional export markets and Iran’s business portfolio will become more diverse. 

Reports show 75% of Iran’s foreign trade are with five countries, namely China, the UAE, Iraq, Turkey and Afghanistan. Such a limited number of trading partners is risky for a country whose export destinations are not diversified. Each of these countries can become dangerous when they acquire a greater share of Iran’s trade and gain monopoly. We are bound to get into trouble for whatever reason, including political issues, with each of these countries accounting for more than 15% of our trade. 

In my opinion, the diversity of markets is important for both import and export. Now that Iran is under sanctions and cannot forge ties with Europe and the US, we need to think and work more with other countries, including those in Southeast Asia, South Asia, Central Asia, Africa and Latin America.