Share of High-Tech Products in Iran's Non-Oil Exports Meager

EghtesadOnline: High-technology exports accounted for less than 1% of Iran’s non-oil exports in the last fiscal year that ended on March 20, a report by the Economy Ministry titled “Stimulus Package for Production in Fiscal 2019-20” reads.

News ID: ۷۸۴۷۱۹

12 June 2019

High-technology exports are products with high research and development intensity, such as in aerospace, computers, pharmaceuticals, scientific instruments and electrical machinery.

Seventy percent of Iran's non-oil exports were raw materials that utilize relatively unsophisticated equipment and production techniques, according to Financial Tribune.

High-tech products constituted 15% of Iran’s overall imports whereas low-tech merchandise made up 45% of total imports to Iran during the period under review, Fars News Agency reported.

Last year’s economic and political developments including the reimposition of US sanctions and their impacts on Iran’s foreign currency and commodity markets have affected Iran's non-oil exports and imports.

The Iranian government attempted to calm the forex market by introducing a series of policies to contain imports and ban the export of essential goods.

The import of 1,339 types of commodities was banned last year and plans are to add more to the list.

"The number of items on the import ban list will reach 1,530 in the current Iranian year [March 2019-20] in a bid to shore up support for domestic production," Deputy Industries Minister Farshad Moqimi was recently quoted as saying.

According to the ministry’s report, two main challenges facing Iran’s foreign trade this year are reliance on the export of raw, unprocessed goods and dependency of local manufacturers on imports.

Iran’s non-oil exports followed an upward trend from the fiscal 2013-14 to 2018-19, despite their ups and downs.

Last year, however, it saw a 5.6% decline in exports compared with the year before to stand at $44.3 billion. The export of gas condensates also decreased by 30.1% in terms of value, the steepest decline among all export items. The export of petrochemicals fell by 2.3%.

The highest growth in exports were registered by boats, non-electric motors, wire products, coal and alloy steel rolled coil.

Products with the steepest decline in exports last year were steam turbines, gauging and measurement tools, AC electrical machines, chemicals, copper ores, pharmaceuticals, wheat, aluminum and cars and other motor vehicles.

Exports of livestock and onions went up twofold and 2.5-fold in terms of weight respectively last year. The export of palm and raw vegetable oils increased by 87%; chicken by 48%, lump sugar and raw sugar by more than 400% while exports of tomatoes rose by 51%.

China remained Iran’s top export destination while the UAE was overtaken by Iraq as second largest export destination of Iranian products last year.

Exports to Turkey fell by 40% and the neighboring country came in sixth, after Afghanistan and South Korea, as Iran’s top trading partners in exports. Exports to European countries, especially Italy and Germany, saw significant decreases.

The report noted that the growth in foreign currency exchange rates has not improved exports due to restrictions created by sanctions.

Iran’s non-oil imports experienced a decline of 21.7% last year to reach $42.6 billion. Imports of intermediate goods (56% of total imports) slipped by 14.7% and those of capital goods (18% of total imports) fell by 20.7% last year.

The report noted that the decline in imports would have negative effects on Iran’s economic growth and production due to the reliance of local manufacturing sector on imported input.

Last year, the import of intermediate goods used in textile/leather industries, wood and basic metals declined by 48%, 40% and 38%, respectively, registering the sharpest decline compared with the year before.

The import of intermediate goods of computer industries, optical and electronic devices fell by 24%, those of mineral products slid 23% and the import of rubber and plastic intermediate goods decreased by 32% during the period under review.