Iran's Foreign Trade Hit $29 Billion

EghtesadOnline: Iran traded 50.8 million tons of non-oil goods worth $29 billion with other countries during the first four months of the current fiscal year (March 21-July 22), indicating an increase of 21% in weight and 47% in value compared with the corresponding period of last year.

News ID: ۷۸۶۷۷۰

01 August 2021

According to Mehdi Mirashrafi, the head of the Islamic Republic of Iran Customs Administration, exports reached 38.3 million tons worth $14.3 billion, which shows a year-on-year growth rate of 27% and 65% in weight and value, respectively.

Major exported goods included liquefied gas, polyethylene, semi-finished steel products, methanol, gasoline, steel ingots, liquid propane, bitumen and copper cathode.

The main export destinations included China (10 million tons of goods worth $4.3 billion), Iraq (10.9 million tons worth $2.8 billion), the UAE (4.3 million tons worth $1.6 billion), Turkey (1 million tons worth $923 million) and Afghanistan (1.8 million tons worth $728 million.)

Imports hit 12.5 million tons worth $14.5 billion, registering an increase of 5% in weight and 32% in value compared with last year’s same period, ISNA reported.

Main exporters to Iran were the UAE (4 million tons of goods worth $4.7 billion), China (1 million tons worth $3.1 billion), Turkey (1.3 million tons worth $1.5 billion), Germany (351,000 tons worth $563 million) and Switzerland (672,000 tons worth $539 million.)

Iran imported 9.4 million tons of essential goods during the period, of which 8.4 million tons were six subsidized items.

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

“Over 4.6 million tons of essential goods have arrived at ports of entry, 400,000 tons are being unloaded and more than 1 million tons are on vessels waiting to be unloaded. The strategic reserves of essential goods stand at 15.5 million tons,” the IRICA chief said.

Cellphones, field corn, sunflower oil, barley, soymeal, wheat, soybeans, sugar and rice were the main products imported during the period.

Noting that IRICA has significantly accelerated customs clearance procedures by following directives approved about gradual and on credit clearance of essential goods, the official said, “The daily discharge of 47,000 tons of goods from Imam Khomeini Port in the first quarter increased to 62,000 tons in the fourth month of the year [ended July 22], indicating a 32% rise.”

With 40 wharfs, 140 kilometers of railroads within its premises and equipped with the latest loading and unloading facilities, Imam Khomeini Port is the hub of essential goods imports.

Mirashrafi said a total of 3.75 million tons of foreign commodities were transported through Iran during the period, indicating a 95% growth compared with last year’s same period.

“IRICA confiscated 5,300 billion rials [$22.08 million] worth of smuggled goods in the first three months of the current year,” he added.

Trade in Review

Iran’s non-oil foreign trade declined from $85 billion in the fiscal 2019-20 ($41.3 billion worth of exports and $43.7 billion of imports) to $73 billion in the fiscal 2020-21 ($34.52 billion exports and $38.5 billion of imports).

Latest statistics released by the Central Bank of Iran show that except in the month to Oct. 21 and the one to Nov. 20, Iran’s trade balance was negative every month of last year.

The two aforementioned months registered a trade surplus of $1.42 billion and $0.12 billion respectively.

The highest export value was registered in the month to Oct. 21 with the dispatch of 19.26 million tons worth $4.67 billion while the month to March 20 registered the highest import value of $4.57 billion weighing 2.92 million tons.

The lowest export and import values were registered in the month to April 19 with $1.65 billion weighing 5.35 million tons and $1.93 billion weighing 2.53 million tons respectively.

According to the Trade Promotion Organization of Iran, there were four main reasons behind the decrease in Iran’s foreign trade in the fiscal 2020-21 compared with the years 2011-12 to 2013-14.

The first reason behind the decrease was the decline in oil revenues. A portion of raw material costs is supplied from oil revenues. The decline in revenues caused problems in the way of foreign exchange earnings and purchase of raw materials for export products. Therefore, it caused a decline in export volume during the period.

Currency shock is another reason behind the decline. One of the main variables affected by currency shocks is non-oil exports. Iran’s currency market faced an unpredicted shock in the fiscal 2020-21 due to the intensification of US sanctions, the decline in foreign exchange reserves and the Covid-19 pandemic.

Alongside these problems, the Central Bank of Iran’s forex earnings law made some exporters unable to meet the CBI requirements, so they stopped exporting their products and waited for the currency market and forex laws to stabilize.

The US sanctioned petrochemical industries and 39 related institutions, and its Department of Treasury banned transactions, purchases, credit and insurance services to Iran by other countries. Oil prices also impacted petrochemical export and due to the low oil prices in the fiscal 2020-21 alongside the US sanctions, petrochemical products registered a decline during the period under review.

Coronavirus pandemic was another reason behind the significant decline in trade. Closure of borders, new standards for foreign trade and problems faced by other countries in exporting Iranian products, especially agricultural and food products, reduced Iran’s foreign trade.

Iran and the US are holding indirect negotiations on a return to compliance to the 2015 Iran nuclear deal, formally known as the Joint Comprehensive Plan of Action. Representatives of Britain, China, France, Germany, Russia and European Union shuttle between the US and Iranian delegations.

JCPOA limited the scope of Iran's civilian nuclear program. In return, the Islamic Republic received relief from US and international sanctions. Washington walked out of the deal under the administration of former president, Donald Trump.

With the possible agreement between the two countries and lifting of sanctions, some of these obstacles such as the US sanctions may be removed and there is an opportunity for Iran to develop and increase its foreign trade.