Iran's Non-Oil Trade With EU Declines

EghtesadOnline: Trade between Iran and 27 member states of European Union stood at $3.54 billion during the first eight months of the current Iranian year (March 20-Nov. 20), indicating a 23.5% decline compared with the same period of last year.

News ID: ۷۵۱۶۹۴

12 December 2020

According to the latest statistics released by Iran’s Customs Administration, $323.45 million worth of non-oil goods were exported to EU member states during the eight months under review. The figure is 28% lower than the previous year’s $452.8 million.

Germany alone accounted for 41% of EU’s imports from Iran during the eight-month period. A total of $131.4 million worth of non-oil products were shipped to Germany from Iran, indicating a 14% increase year-on-year.

Italy was the second largest importer of Iranian products in the EU, excluding oil. The country imported $60.45 million worth of goods from Iran in the eight months to Nov. 20, down 51.2% year-on-year.

With an 11% share in exports to EU, Spain was the third largest destination for non-oil goods made in Iran, followed by Bulgaria with 6%, Romania 5% and Belgium 4%.

Edible fruits and nuts topped the list of Iran’s non-oil exports to EU, according to IRICA, with a total value of $111.9 million.

Plastics and polymers came next with $34.1 million, followed by coffee, tea and spices with $26.22 million and products of animal origin with $25.9 million and pharmaceutical products with $25.4 million.

Iron, steel and carpets were the other top items exported from Iran to the EU.

Iran’s non-oil imports from the 27 European states amounted to $3.21 billion during the eight months under review, indicating a 22.9% decline compared with the same period of last year.

According to IRICA figures, Germany was also the largest exporter of goods and commodities (excluding oil) to Iran, with $1.153 billion. The figure, however, is 16.2% lower than the corresponding period of last year.

It was followed by the Netherlands with $566 million (down 22%), Italy with $459 million (down 22%), Austria with $207.5 million (down 19%). Imports from France amounted to $180 million during the period, to register the largest decline (37%) among leading European exporters to Iran.

Cereals and its subcategories topped the list of imports from European Union member states during the period, with $569.4 million. These were followed by goods categorized under reactors, boilers and machinery with $536 million and pharmaceutical with $421 million.

Optical, photographical, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus, parts and accessories; residues and waste from the food industry; and oilseeds were the other groups of goods at the top of Iran’s imports from EU.

Overall Foreign Trade

Iran’s non-oil foreign trade hit 97.7 million tons worth $44.6 billion in the eight months leading to Nov. 20.

According to Mehdi Mirashrafi, the head of Islamic Republic of Iran Customs Administration, exports accounted for 75 million tons worth $21.5 billion and imports constituted 21.8 million tons worth $23.1 billion.

“Compared with the corresponding period of last year (March 21-Nov. 21, 2019), exports registered a 14% and 19% decline in weight and value respectively. Imports saw a respective 1% and 18% decline in weight and value year-on-year,” he was quoted as saying by IRNA.

Imports of essential goods accounted for 15.2 million tons (about 70%) of total imports.

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.

“The main export destinations over the period included Iraq and China with $5.3 billion each, the UAE with $2.7 billion, Turkey with $1.6 billion and Afghanistan with $1.5 billion,” he said.

Noting that pistachio was Iran’s fourth biggest export during the period, IRICA chief said each kilogram of pistachio was exported at $6, compared with the average 30 cent per kilogram of Iran’s exports.

“Top exporters to Iran were China with $6 billion, the UAE with $5.4 billion, Turkey with $2.6 billion, India with $1.4 billion and Germany with $1.1 billion,” the IRICA chief said.

A total of 4.47 million tons of cargo were transited across the country over the period, indicating a 15% decline YOY, he added.

Notably, Iraq stood above China by a narrow margin when it comes to exports from Iran. The neighboring country began to overtake China as Iran’s biggest destination since last fiscal month.

Coronavirus, Sanctions

World 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, chairman of Iran-China Chamber of Commerce, was quoted as saying 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 exporting items.”

Hariri noted that $45 billion worth of essential goods, pharmaceuticals and medical equipment need to be imported to operate production lines, which seems to be unreachable, given the restrictions placed on oil sales.

“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 impacts of the spread of novel coronavirus on national and international trade,” a member of Iran Chamber of Commerce, Industries, Mines and Agriculture’s board of directors, Pedram Soltani, was quoted as saying by ISNA.

“Under the current circumstances, it is estimated that the country’s exports will fall between $10 billion and $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.”

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 not be affected.

“Yet, the outbreak of Covid-19 and 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,” he said.

Soltani further said based on World Trade Organization’s prediction, world trade will see a 13-32% 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.