Domestic Economy

Unpromising Trade Despite Surplus

Unpromising Trade  Despite Surplus
Unpromising Trade  Despite Surplus

While reports provided by Iran Customs Administration (ICA) indicate a positive balance of trade in the first two months of the current Iranian year (started March 21), the overall volume of imports and exports has reduced compared with the same period of the previous year.

Iran exported 17,390 tons of goods (excluding oil, gas and suitcase trade) worth $7.861 million during the two-month period, 2.66% less compared with the same period of a year ago. Meanwhile, the country imported 5,556 tons of goods, valued at $6.344 million, indicating a decline of 13.82% compared with last year.

Head of ICA, Masoud Karbasian, earlier explained that the decline in export value is mainly due to the reduced global oil prices that have affected the price of gas condensates. He also noted that the higher number of non-working days during the period has been in part responsible for the diminished trade.

A closer look at the trade of gas condensates indicates that 5,832 tons of gas condensates worth $2.468 million have been exported in the first two months of the year, amounting to 31.39% of total export value. While exports have increased by 16.23% over the similar period of the previous year, the value of exported material has fallen by 20.34%.

While more petrochemical products have been exported during the period compared with the previous year, the value of petrochemical exports has grown less than the export volume. Iran exported 3,908 tons of petrochemical products, amounting to $2.566 million during the period, accounting for 32.65% of the value of total non-oil exports. Data show 63.14% growth in weight and only 23.69% growth in value of petrochemical exports compared with last year.

Apart from reduced export of gas condensates, export of other commodities such as industrial, mineral and agricultural products has also declined over the period. As much as 7,560 tons of various products, valued at $2.827 million were exported, comprising 35.96% of the value of non-oil exports. Data show a 25.44% drop in terms of weight and a 2.61% decline in terms of value compared with the previous year.

  Boosting Imports Equally Important

The reduced trade in the past two months has worried some experts, pointing out that the trend is not in line with the government’s policy to boost non-oil exports and foster stronger economic relations with the world.

President Hassan Rouhani and government officials have on various occasions announced plans to boost the volume of non-oil exports by at least 20% during the current Iranian year. Last year, Iran earned approximately $50 billion from export of non-oil goods, while imports were estimated at about $52.5 billion, registering a trade deficit of $2.5 billion.

Experts also point out that to boost exports, it is equally important to increase import of raw material and machinery to boost production.

So far, a considerable share of Iran’s imports comprises finished consumer products that do not play any role in increasing productivity in the country. But for the country to boost non-oil exports, attention must be paid to filtering imported goods and facilitating only the import of useful commodities for production.

Data provided by the ICA also showed that the average value of imported goods during the first two months of the year stood at $1,142 per ton, which is more than 2.5 times the average value of exported commodities at $452 per ton.

Deputy minister of industry, mine and trade, Valiollah Afkhami-Rad on Monday observed that the lower average value of Iran’s exported commodities indicates that the country has been exporting a large amount of unprocessed material rather than value-added, high-technology products.

  Trade Surplus Not Always Good

Experts also note that a positive balance of trade is not always to be taken as good news, as it means that less domestically manufactured goods are purchased by the people.

“A trade surplus is not always a good thing. At a time when production has remained consistently low in the past years, declining imports and increasing exports indicate that the people’s buying power has reduced,” head of Education and Economic Culture Committee in Iran’s Chamber of Commerce, Jamshid Edalatian Shahriari, told ISNA.

He voiced concerns that if Iran arrives at a nuclear agreement with the world powers, the gap between imports and exports could widen, leading to lower consumption by the Iranian people.