Economy, Domestic Economy

Iran Share Meager in Turkish Market

Iran Share Meager in Turkish MarketIran Share Meager in Turkish Market

Trade turnover between Iran and Turkey stood at $13.72 billion in 2014, recording a 6% decrease compared with 2013 when the figure stood at $14.57 billion, according to the latest data released by the Turkish Statistical Institute (TurkStat).

Based on the report, Turkey’s exports to Iran totaled $3.88 billion in 2014, registering a 7% decrease compared with 2013. Turkey’s imports from Iran, most of which include oil, natural gas and their condensates, amounted to $9.83 billion in 2014, registering a 5.3% decrease compared with the previous year, IRNA reported.

Turkey’s exports to Iran accounted for 2.5% of the country’s total exports in 2014, while Iran accounted for 4.1% of Turkey’s total imports in that year.

“Turkey imports more than $250 billion worth of commodities from different countries each year, while Iran accounts for less than 5% of this market,” said an official in Iran’s ministry of industry, mine, and trade, Abbas Khaleghitabar, adding that vast borders between Iran and Turkey and the cultural and religious proximities between the two makes Turkey “a suitable trade partner for Iran and a gateway to European markets.”

“Last year, Turkey was Iran’s sixth export destination and the fifth source of imports. During the first 10 months of the current Iranian year (ends March 20, 2014), Turkey remained Iran’s sixth export destination while it grew to the fourth position as Iran’s import source,” said the official.

Noting that Iran is the second exporter of natural gas to Turkey after Russia, Khaleghitabar called for increased  non-oil exports to the neighboring country.

 PTA Opportunities

Economists are hoping that the preferential trade agreement (PTA) signed between Iran and Turkey in January this year will help boost bilateral trade.  

Almost a decade after the idea of preferential trade was first proposed, Iran penned its first preferential PTA with Turkey when Prime Minister Recep Tayyip Erdogan visited Iran in January. According to the agreement, 125 Iranian goods and 140 Turkish goods are to be traded at preferential tariff rates.

Experts believe signing PTAs with other countries is one of the measures that can help pave the way for Iran to finally join the World Trade Organization (WTO), a target Iran has been perusing for decades.

Iran has signed PTAs with nine countries so far, while it is the first time for Turkey to sign a PTA with another country to trade agricultural goods.  

While some experts view the government’s policy to reduce import tariffs on Turkish goods as a move in Turkey’s favor and harmful for the domestic manufacturers, the policy is expected to benefit domestic manufacturers in the long run, since the PTA will provide a competitive atmosphere for Iranian manufacturers, encouraging them to produce quality products in accordance with international standards and latest technological developments.

Economists advise Iranian manufacturers to make the most of the opportunity provided by the PTA to identify the potential for various business activities in Turkish market.

Foreign trade is considered as an effective engine of Turkey’s economic growth. The total value of Turkey’s foreign trade amounted to $399.94 billion in 2014.

The value of Turkey’s exports increased by 3.9 percent from $151.8 billion in 2013 to $157.7 billion in 2014, while imports fell by 3.7 percent from $251.6 billion to $242.2 billion over the period.

According to the statistics, Turkey’s exports to imports ratio increased from 60.3 percent in 2013 to 65.1 percent in 2014. In other words, for every $100 of imports, Turkey exported $65.1 worth of goods.