Iran’s H1 Foreign Trade Tops $30b

EghtesadOnline: Iran’s non-oil foreign trade stood at 62.84 million tons worth $30.34 billion during the first half of the current fiscal year (March 20-Sept. 21), indicating a 28% decline in value compared with the corresponding period of last year.

News ID: ۷۵۱۱۷۹

04 October 2020

According to Mehdi Mirashrafi, the head of Islamic Republic of Iran Customs Administration, H1 non-oil exports accounted for 46.31 million tons worth $13.56 billion and imports constituted 16.52 million tons worth $16.78 billion of the total trade figure.

As a result, the country’s trade deficit stood at $3.22 billion over the period under review.

Compared with the corresponding period of last year (March 21-Sept. 22, 2019), exports and imports registered a 35% and 21% decline in value, respectively.

Iran’s foreign trade stood at $42.16 billion during the same period of last year, with exports hovering around $20.94 billion and imports at $21.22 billion.

Gasoline was the country’s top exported commodity in H1 followed by polyethylene, polyethylene terephthalate, methanol and urea.

“China was the main export destination where Iran shipped 13.11 million tons of goods worth $3.7 billion during the six-month period to Sept. 21 to account for 27.3% of Iran’s total exports,” Mirashrafi said.

“It was followed by Iraq with 9.28 million tons worth $2.97 billion and a share of 21.9% of Iran’s exports, the UAE with 7.16 million tons worth $1.93 billion and a share of 14.2%, Afghanistan with 3.33 million tons worth $1.1 billion and a share of 8.1% and Turkey with 1.44 million tons worth $731 million and a share of 5.3% from Iran’s total exports. Overall exports to these five countries amounted to $10.44 billion, accounting for 72% of Iran’s exports in terms of weight and 74% in terms of value.”

Top five exporters to Iran in H1 were China with 1.59 million tons worth $4.29 billion and a share of 25.6% of Iran’s total imports, the UAE with 2.11 million tons of non-oil goods worth $3.96 billion and a share of 23%, Turkey with 2.4 million tons worth $1.81 billion and a share of 10.8%, India with 1.26 million tons of non-oil goods worth $1.09 billion and a share of 6.5% and Germany with 772,000 tons of goods worth $835 million and a share of 5%. These countries together exported 8.16 million tons of non-oil goods worth $12 billion to Iran, accounting for 53% of Iran’s total imports in terms of weight and 70% in terms of value.

According to a report by the Persian-language daily Donya-e-Eqtesad, Iran’s non-oil exports and imports during the month ending Sept. 21 stood at $2.66 billion and $3.08 billion, indicating a 21% and 10% increase month-on-month respectively.

Exports weighed 8.31 million tons and imports reached 3.44 million tons during the sixth month of the current Iranian year.

Essential Goods Account for 70% of Imports

Essential goods made up 70% of Iran’s imports; the rest included raw materials, machinery and production components, according to the IRICA chief.

Also known as necessity goods, essential goods are products consumers will buy, regardless of changes in income levels.

Amid high inflation and diminished purchasing power, the Iranian government has sought to ensure a steady supply of essential goods at subsidized prices.

Following the re-tanking of the national currency in early 2017, the government introduced stringent rules like banning the import of non-essential goods, especially those produced inside the country (known as Group IV goods). It allocated subsidized currency at the rate of 42,000 rials to a dollar to 25 categories of goods (also known as Group I or essential goods) to help protect consumers against galloping inflation, rampant price gauging 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, known by its Persian name Nima. Importers of goods in Group III could buy hard currency from exporters who were not required to offer their forex earnings on Nima.

In the last fiscal year (March 2019-20), the government removed five items, namely red meat, butter, pulses, tea and sugar, from the list of basic goods entitled to subsidized currency.

Vegetable oil, oilseeds, corn, barley, soybean meal, raw materials for manufacturing tires, heavy-duty vehicle tires, paper pulp and different types of paper are still considered essential goods.

A total of 25.09 million tons of essential goods worth close to $15.5 billion were imported into Iran during the last fiscal year (March 2019-20) to register a 20.77% and 17.13% increase in weight and value respectively compared with the year before.

This volume of essential goods imports accounted for 71% and 35% of the volume and value of last year’s total imports respectively, according to the IRICA spokesman.

“The imported essential commodities included wheat, sugar, corn, rubber, barley, processed tea, rice, different kinds of seeds, red meat, soybeans, pulses, paper, chemical fertilizers and industrial machinery.

Imam Khomeini Port in the southern Khuzestan Province is the main hub for the import of essential goods in Iran.

The port, according to Adel Deris, director general of Khuzestan’s Ports and Maritime Organization, enjoys 40 wharfs, 140 kilometers of railroads within its premises and is equipped with the latest loading and unloading facilities.

Close to 90% of Iran's demand for livestock feed raw material as well as 79% of grains are imported through this southern port.

The government plans to continue subsidizing essential goods in the next fiscal year (March 2021-21).

According to Vice President Mohammad Baqer Nobakht, who doubles as the head of Iran’s Plan and Budget Organization, the government will channel earnings from oil exports to imports of essential goods at the subsidized rate of 42,000 rials per US dollar.

He made the statement on the sidelines of the first meeting of the so-called Budget Headquarters 1400 (the Iranian year starting March 2021) held on Aug. 22.

Discussions centered on the composition of the headquarters, the Joint Commission—a parliamentary body responsible for reviewing the budget bill as well as the five-year economic development plans—and eight specialized taskforces.

These meetings are being held regularly up until Budget Day (the day the government presents its budget to the legislature for approval), i.e. Dec. 2.