TPO Chief Scrutinizes Widening Trade Deficit

Iran’s non-oil trade deficit stood at $5.93 billion for the first nine months of the current fiscal year (started March 21, 2017), while last year’s similar period saw a trade surplus of $658 million.

Exports during this year’s nine-month period hit 88.57 million tons worth $31.64 billion, indicating a 2.39% decline year-on-year, the latest report by the Islamic Republic of Iran Customs Administration announced.

Imports amounted to 26.59 million tons worth $37.57 billion, up 18.31% YOY.

“The decline in exports is due to the devaluation of Iran’s main exported commodities,” Chairman of Trade Promotion Organization of Iran Mojtaba Khosrotaj was quoted as saying by the Persian daily Donya-e-Eqtesad.

These commodities included gas condensates, industrial oils, bitumen, hydrocarbons, urea fertilizer, polyethylene, styrene, butadiene, ammonia, furfural, p-Xylene, diethylene glycol, paraffin wax, pistachio, flat steel, cement, tomato paste, apples, metal profiles, raisins, laundry detergent, plastic bags, livestock and agricultural products such as melon, grapes and onions.

“Lack of financial support for exporters is another reason behind the decline in exports,” he said.

The rise in imports also led to the trade deficit.

Noting that a handful of imported commodities accounted for $3.5 billion of the rise in imports, the official noted that Market Regulation Headquarters has reduced import duties of a number of essential goods, namely rice, meat and butter, to prevent any price increase in the final months of last year.

The move led to an increase in the import of these items. For example, rice imports increased by around $500 million, sunflower oilseeds by $200 million, cattle feed barley by $180 million, corn by $100 million, raw sugar by $100 million, banana by $65 million and soybean by $55 million.

The $1.2 billion rise in the imports of auto parts—thanks to an increase in domestic car production—and car imports worth $180 million despite the shutdown of order registrations over the past five months can also explain the increase in  imports.

“Cellphones worth $280 million, flat steels worth $55 million and tires for light and heavy cars worth $170 million were also imported during the period to raise the overall value of imports this year,” Khosrotaj said.

Gas condensates ($5.09 billion), liquefied propane ($1.06 billion), methanol ($835 million), light crude oil, excluding gasoline ($810 million), and granulated hematite iron ore ($765 million) were Iran’s main exported commodities during the nine months.

Imports mainly included auto parts ($1.24 billion), field corn ($1.11 billion), rice ($1.01 billion), soybean ($749 million), vehicles of engine displacement between 1500 cc and 2000 cc, except for ambulance and hybrid cars ($660 million).

China was the main customer of Iranian products during the nine-month period as Iran exported $6.52 billion worth of goods to the Asian country, 12.78% more than the corresponding period of last year.  

Other major export destinations included Iraq with $4.62 billion, the UAE ($4.45 billion), South Korea ($3.01 billion) and Afghanistan ($2 billion). Exports to Iraq, South Korea and Afghanistan rose by 0.36%, 28.99% and 6.27% respectively compared to the last year, but the UAE imported 18.39% less goods from Iran in nine months compared with last year’s same period.

Major exporters to Iran included China ($9.45 billion), the UAE ($6.65 billion), Turkey ($2.57 billion), South Korea ($2.56 billion) and Germany ($2.95 billion).

The average price of each ton of exported goods stood at $357, posting a 5% rise over the same period of last year and the average price of each ton of imported commodities hovered around $1,413, up 12% compared with last year’s corresponding period.