Iran’s foreign non-oil trade stood at 145.7 million tons worth $73 billion in the last fiscal year (March 2020-21).
According to Mehdi Mirashrafi, the head of the Islamic Republic of Iran Customs Administration, exports accounted for 112 million tons worth $34.52 billion and imports constituted 34.4 million tons worth $38.5 billion of the sum.
Iran’s main export commodities included gasoline, natural gas, polyethylene, propane and pistachio, with the latter alone earning $1.2 billion.
“The main export destinations were China with 26.6 million tons worth $8.9 billion, Iraq with 25.6 million tons worth $7.3 billion, the UAE with 15.2 million tons worth $4.6 billion, Turkey with 6.3 million tons worth $2.5 billion and Afghanistan with 7 million tons worth $2.2 billion. These five countries imported 80 million tons of non-oil goods worth $25.7 billion,” he was quoted as saying by Mehr News Agency.
China, Iran’s biggest trading partner, accounted for 26% of Iran's total non-oil exports, as 26.58 million tons of non-oil goods worth $8.95 billion were shipped from Iran to China during the period.
Pistachio, nuts, minerals, construction materials, methanol, carpet, iron ore, glassware and fruits were the main types of goods exported from Iran to China in the last fiscal year.
Imports from China totaled 3.54 million tons worth $9.76 billion during the year to March 21, 2021, to account for 10.6% of the total volume of Iran's imports and 25.3% of the total value of imports during the period. Industrial machinery and raw materials, medical equipment, paper, wood, textile, auto parts and sports equipment were Iran's main imports from the South Asian state in the fiscal 2020-21.
“Iran’s foreign trade declined by 25 million tons due to sanctions and the Covid-19 pandemic,” he said, adding that the country’s trade deficit stood at $4 billion.
Essential Goods Imports at 23m Tons Worth $12b
Mirashrafi noted that a total of 23.1 million tons of essential goods, including corn, cellphones, rice, soybean meal, oilseeds, wheat and unprocessed oils, worth $12 billion were imported during the period under review.
Iran imported 3.5 million tons of essential goods worth $9.7 billion from China, 5 million tons worth $9.6 billion from the UAE, $4.3 billion from Turkey, 2.2 million tons worth $2.1 billion from India and 1.2 million tons worth $1.8 billion from Germany in the year to March 20.
Also known as necessity goods, essential goods are products consumers will buy, regardless of changes in income levels.
Following the re-tanking of the national currency in early 2017, the government introduced stringent rules like banning the imports of 1,339 items categorized as “Group IV”—products that were deemed “non-essential” and have domestic counterparts in the market—in a move to economize on foreign currency amid US sanctions.
IRICA stopped clearing Group IV merchandise despite the fact that more than €70 million worth of them had already arrived at the country’s ports.
The administration once allowed the clearance of Group IV products on certain conditions from Feb. 18-Sept. 16, 2020. However, there are still abandoned goods piled up at customs terminals across the country, some of which are on the brink of decay (perishable goods).
The government also decided to allocate subsidized currency at the rate of 42,000 rials per US dollar to 25 categories of goods (also known as Group I or essential goods) to help protect consumers against galloping inflation, rampant price gouging and hoarding, not to mention the high and rising cost of living.
Two other categories of imports were also defined: Group II, which mostly included raw materials, intermediate and capital goods, and Group III consisting of essential consumer goods.
Importers of products in Group II were to meet their forex requirements from the secondary forex market. Importers of goods in Group III could buy hard currency from exporters who were not required to offer their forex earnings on Nima.
As part of the budget bill for the new fiscal year that began on March 21, the exchange rate for the subsidized import of essential goods remains unchanged at 42,000 rials per dollar.
However, according to Mojgan Khanlou, a senior official with the Plan and Budget Organization of Iran, the government is allowed to gradually discontinue the allocation of subsidized forex to import essential goods during the first half of the fiscal 2021-22.
“The ongoing restrictions or total ban on imports of 2,500 types of commodities will continue even if sanctions against Iran are lifted,” says Minister of Industries, Mining and Trade Alireza Razm-Hosseini.
“These measures are aimed at giving a boost to domestic production,” he was quoted as saying by IRNA.
“The production of parts in many industries has been localized such that domestic manufacturers account for 75% of home appliances and 80% of car production.”
Importers of goods included in Group IV of customs categories were recently allowed to discharge their commodities provided that they had completed import registration and foreign currency provision procedures.
According to Mehrdad Jamal Orounaqi, a senior official with the Islamic Republic of Iran Customs Administration, the customs clearance of Group IV goods is not subject to time limitations and importers have been allowed to initiate the procedure starting Feb. 13, ISNA reported.
Coronavirus, Sanctions
Global trade has dropped by 30% following the outbreak of coronavirus and Iran was no exception.
“Seven countries including China, Iraq, Afghanistan, the UAE and India, account for 75% of our foreign trade. Over 50% of Iran’s non-oil exports are headed to Iraq and China, all indicative of our export vulnerability," Majid Reza Hariri, the chairman of Iran-China Chamber of Commerce, said recently.
“Natural gas, gas condensates, petrochemicals and unprocessed minerals make up 70% of Iran's exports. Covid-19 has pushed down the demand for and the prices of these export items.
“For our production lines to become operational, about $45 billion worth of essential goods, pharmaceuticals and medical equipment need to be imported. Given the restrictions placed on oil sales, this figure appears to be unreachable,” he said.
Iran has to prepare for a 30% decline in export value in the current Iranian year (March 2010-21) compared with last year due to the impact of the spread of the novel coronavirus on national and international trade,” Pedram Soltani, a member of Iran Chamber of Commerce, Industries, Mines and Agriculture board of directors, said.
“Under the current circumstances, it is estimated that the country’s exports will fall between $10-12 billion compared with last year. The main products that will experience a plunge due to the pandemic are petrochemicals, steel, mineral products, tiles, ceramics and nuts,” he was quoted as saying by ISNA.
Soltani, a former deputy head of ICCIMA, added that China is most likely the least affected economy by the pandemic and since it is Iran’s top trading partner, exports to this country will hopefully remain unaffected.
“Yet, the outbreak of Covid-19 as well as the nosedive in oil prices will make Iraq, our second biggest export destination, very cautious and we will be facing limitations on the commodities we can export to the neighboring country.”
Soltani noted that based on World Trade Organization’s prediction, world trade will see a 13% and 32% plunge in 2020 (best- and worst-case scenarios), noting that it is likely that the economic crisis awaiting the world now will be more intense than the one experienced in 2008.
