According to the Trade Promotion Organization of Iran, non-oil exports and imports in the fiscal 2021-22 were almost equal while the weight of exported products was three times that of imports, which indicate the country mainly exported raw materials and imported knowledge-based products.
A country's trade volume reflects its role in the global economy and its interaction with international players.
The higher the share of mining trade in a country, the more dependent its economy is on natural resources and away from a knowledge-based economy.
Picture 1 shows the value of Iran's trade with other countries over the past five years.
Iran's Non-Oil Foreign Trade
The most important destinations of Iran’s non-oil export are China, Iraq, Turkey and the UAE.
On the other hand, the UAE, China and Turkey are among the most important exporters to Iran.
In general, in the fiscal 2021-22, about 60% of Iran's non-oil trade were with China, the UAE and Turkey.
Iran's non-oil exports constitute commodities and low-value products, but its imports mainly include advanced and high-priced products.
The almost equal value of the country's non-oil exports and imports, despite the fact that the former is three times the value of the latter, is indicative of this fact.
According to the Value Chain Management Studies Center, the value of each ton of Iran's non-oil exports over the past five years has been $300-400, while the value of each ton of Iran's imports over the same period has been $1,200-1,500.
The value of Iran's non-oil exports has been largely affected by global oil prices. The composition of Iran's non-oil exports and petrochemical exports is shown in Picture 3.
25% Share of Petroleum-Based Products in Non-Oil Exports
From Iran's total $43.2 billion in non-oil exports in the fiscal 2021-22, about $10.7 billion (equivalent to 25%) were petrochemical and petroleum-based products.
Exports of petrochemicals and petroleum-based products often include polymer, methanol and urea.
The increase in export value of petrochemicals and petroleum-based products in the fiscal 2021-22 was partly due to the rising global prices of oil and in part due to the rise in volume of petrochemical exports.
Non-Oil Trade Balance in Review
Picture 4 shows Iran's non-oil trade balance over the years. A positive trade balance means the export earnings can catch up with import needs. Otherwise, the government will have to use earnings from the sales of raw materials to supply foreign currency resources for imports. Therefore, dependency on mineral resources increases, as trade balance turns negative.
Notably, during the last six years, non-oil trade balance was positive only in the fiscal 2016-17 and 2017-18.
IRICA Reviews Fiscal 2021-22 Trade
Iran’s foreign trade, excluding crude oil exports, stood at 162 million tons worth $100 billion in the fiscal 2021-22, registering a 38% rise in value compared with the year before, according to the head of the Islamic Republic of Iran Customs Administration.
“Exports stood at 122 million tons worth $48 billion, registering a 41% increase in value compared with the previous year. Iran’s top five export destinations were China, Iraq, Turkey, the UAE and Afghanistan,” Alireza Moqaddesi was also quoted as saying by IRNA.
Imports hit 40 million tons worth $52 billion during the same period, registering a 21% and 36% growth in weight and value respectively.
The UAE, China, Turkey, Germany and Russia were the main exporters.
“The imports mainly included essential goods, raw materials and production line machinery,” he added.
Also known as necessity or basic goods, essential goods are products consumers will buy, regardless of changes in income levels.
Iran’s essential goods’ imports in the fiscal 2021-22 included corn, unrefined vegetable oil, pharmaceuticals and medical equipment, wheat, oilseeds, soymeal, barley, rice, sugar, heavy vehicle tires, fertilizer, pesticide and insecticide, veterinarian medicine, red meat, chicken, eggs, pulses and tea.
Essential goods’ imports are entitled to subsidized foreign currency gained from oil exports.
Fiscal 2021-22 saw heated debate about whether the controversial practice should continue.
In the end, the fate of subsidized imports remained elusive as members of parliament delegated the responsibility for the removal or continuation to the government.
Transit Trade
Moqaddesi noted that 12.5 million tons of foreign goods were transited through Iran during the same period to register a 68% rise compared with the year before a seven-year high.
IRICA says during the two years to fiscal 2021-22, only around 7.5 million tons of goods were transited through the country per annum, adding that the reasons for the significant increase are the lifting of most restrictions over Covid-19, the government’s establishment of stronger political and economic ties with neighboring countries and the better cooperation of different responsible bodies.
Iran reportedly earns $150 and $50 for each ton of transit goods via road and rail respectively.
Iran’s top 10 busiest transit borders in the last Iranian year (March 2021-22) were Shahid Rajaee Special Economic Zone in the southern Hormozgan Province with more than 3.3 million tons, Bazargan in West Azarbaijan Province with 703,000 tons, Bashmaq in Kurdestan Province with 687,000 tons, Sarakhs in Khorasan Razavi Province with 457,000 tons, Imam Khomeini Port checkpoint in Khuzestan Province with 447,000 tons, Bileh Savar in Ardabil Province with 337,000 tons, Jolfa in East Azarbaijan Province 312,000 tons, Razi in East Azarbaijan Province with 188,000 tons, Astara in Gilan Province with 156,000 tons and Bandar Lengeh in Hormozgan province with 139,000 tons.
These 10 border crossings accounted for 89% of Iran’s overall transit volume (7.5 million tons) during the period under review.
With 12 wharfs, Shahid Rajaee is Iran’s biggest container port, accounting for 90% of the country’s total container throughput.
Over half of Iran’s commercial trading is carried out at Shahid Rajaee, which is located 23 kilometers west of the port city of Bandar Abbas, the capital of Hormozgan Province.
