Iran's Trade With Neighbors Hit $10.5b

EghtesadOnline: Iran’s trade with its 15 neighboring countries stood at $10.5 billion in the first quarter of the current fiscal year (March 21-June 21), data released by the Islamic Republic of Iran’s Customs Administration show.

News ID: ۷۸۶۸۰۳

07 August 2021

The UAE with $5.52 billion worth of exchanges was Iran’s biggest trading partner among its neighbors during the period under review.

Total exports to these countries stood at $5.61 billion.

Iraq with $2.34 billion was the biggest export destination. It was followed by the UAE with $1.27 billion, Turkey with $595.28 million, Afghanistan with $596.5 million and Pakistan with $247.53 million.

Iraq, Turkey, Afghanistan, Pakistan, Russia, Oman, Azerbaijan, Turkmenistan, Kuwait, Qatar, Kazakhstan, Armenia, the UAE, Bahrain and Saudi Arabia are Iran’s neighboring countries.

Total imports from these countries reached $4.89 billion in Q1.

The UAE with $3.25 billion was the top exporter to Iran during the period. It was followed by Turkey with $1.04 billion, Russia with $321.47 million, Oman with $101.22 million and Iraq with $72.25 million.

Iran traded a total of 38.4 million tons of non-oil goods worth $20.9 billion with other countries in Q1, registering an increase of 7.7 million tons or 25% in weight and $7 billion or 50% in value compared with the corresponding period of last year.

This means trade with neighbors accounted for over half of Iran’s foreign commercial exchanges.

According to Mehdi Mirashrafi, the head of the Islamic Republic of Iran Customs Administration, exports reached 30 million tons worth $10.7 billion, which shows a year-on-year growth of 38% and 69% in weight and value respectively.

China with 7.1 million tons of imports from Iran worth $3.1 billion was Iran’s biggest export destination.

Total Q1 imports hit 8.4 million tons worth $10.2 billion, registering a 6% decrease in weight but a 34% increase in value compared with last year’s same period.

The UAE was not only the biggest exporter to Iran among the neighboring states in Q1, but it was also the biggest worldwide.

China with 683,000 tons worth $2.2 billion followed the UAE.

Fiscal 2020-21 Trade

Iran traded $36.45 billion worth of non-oil goods with its 15 neighboring countries in the last Iranian year (ended March 20, 2021) down from $40 billion of the preceding year.

Iran’s exports to its neighbors totaled $20.35 billion in the fiscal 2021-22, indicating a $4 billion decrease in value year-on-year.

Imports amounted to $16.09 billion during the period under review, unchanged compared with the same period of last year.

The UAE was Iran’s leading trade partner among the neighboring states, with $14.4 billion worth of non-oil exchanges.

“Our exports to the neighboring country hit 15.27 million tons worth $4.62 billion, showing a 27% and 6.5% rise in volume and value respectively YOY. The exports account for 13.6% and 13.4% of Iran’s total exports over the period. The country was Iran’s third biggest export destination after China and Iraq,” Rouhollah Latifi, the IRICA spokesman, was quoted as saying by the news portal of Iran Chamber of Commerce, Industries, Mining and Trade (Otaghiranonline.ir).

The official noted that the main exported goods included seafood, flower, fruit and vegetable, nuts, dried fruit, saffron and other spices, chocolate and pastry, fruit juice, vinegar, construction materials, cement, minerals, floorings, carpet, apparel, footwear, handicrafts, steel products, doors and windows, kitchen utensils, industrial machinery, light bulbs, furniture, musical instruments, medical equipment, electric and electronic devices, auto spare parts, packaging machinery and wickerwork.

“We imported close to 5.07 million tons of goods from this southern neighbor, worth $9.65 billion. The figures account for 15% and 25% of Iran’s total imports over the year under review respectively. The UAE was the second biggest exporter to Iran after China,” he added.

Iran’s main imports from the UAE over the period, Latifi said, were tropical fruit, livestock, pulses, coffee and cocoa, spices, rice, barley, oilseeds, seeds, edible oils, tobacco, minerals, industrial oils and raw materials, different kinds of supplements, medical and dentistry equipment, glue, paper and cardboard, tire production raw materials, fabric and thread, packaging raw materials and machinery, steel products, automatic doors, elevators, bolts and nuts, auto spare parts, road construction and sports equipment.

Transactions With UAE

Iran had set the goal of increasing exports to the UAE to $6 billion in the year ending March 2020 and $7 billion in the year ending March 2021; none of these goals materialized.

“Our actual exports to the neighboring country stood at $4.5 billion in the year ending March 2020. Iran has set its export target at $8 billion for the next year [March 2021-22]; there are multifold barriers in the way of reaching this goal,” Farshid Farzanegan, the chairman of Iran-UAE Chamber of Commerce, said before the Iranian New year (started March 21).

According to the official, these barriers include the Central Bank of the UAE’s strict policy regarding Iranians’ banking accounts, inefficiency of Iran’s road transport, particularly that of refrigerated containers and lack of infrastructures for cold storage of agricultural products. “Countless trade rules and regulations are constantly shifting. Iran-UAE trade would improve, if there had been stability in terms of introducing laws,” he added.

The official noted that facilitating visits by economic operatives, improving banking ties, holding permanent exhibitions, employing active economic diplomacy regarding the UAE, Bahrain and the Saudi Arabia, which has the import capacity of up to $135 billion, will help improve regional trade ties.

“As we speak, Iranian products find their way into Saudi Arabia through the UAE and Oman,” he said.

Farzanegan further said the launch of an economic department and an industry and trade department in Iran’s Embassy in the UAE would be helpful.

“We at the Iran-UAE Chamber of Commerce are all set to transfer our data and information to these departments. Afghanistan is now exporting Iranian handicrafts and saffron to the UAE,” he added.

Noting that Iran needs to approve laws related to the standards of the Financial Action Task Force, Farzanegan said Iran’s blacklisting by the global watchdog has interrupted trade with the UAE.

Following the UAE in the list of Iran’s trade partners among neighboring countries were Iraq with $7.58 billion, followed by Turkey with $6.9 billion, Afghanistan with $2.31 billion and Russia with $1.53 billion.

Pakistan and Oman followed with $1.17 billion and $871 million, respectively.

Iranian goods worth $7.44 billion were exported to Iraq, putting the country on top of the list of Iran’s export destinations among the neighboring states.

The UAE, Turkey and Afghanistan came next with $4.66 billion, $2.53 billion and $2.3 billion, respectively.

With $9.75 billion, the UAE accounted for the largest share of Iran’s imports from neighboring countries during the period. Turkey followed with $4.39 billion worth of goods to Iran. Russia with more than $1.03 billion worth of goods exported to Iran came next.

Foreign Non-Oil Trade

Iran’s total foreign non-oil trade stood at 145.7 million tons worth $73 billion in the last fiscal year (March 2020-21), suggesting that neighboring countries accounted for about half of the total trade volume.

According to Mehdi Mirashrafi, the head of Islamic Republic of Iran Customs Administration, exports accounted for 112 million tons worth $34.52 billion and imports constituted 34.4 million tons worth $38.5 billion of the sum.

“The main export destinations were China with 26.6 million tons worth $8.9 billion of imports from Iran, Iraq with 25.6 million tons worth $7.3 billion, the UAE with 15.2 million tons worth $4.6 billion, Turkey with 6.3 million tons worth $2.5 billion and Afghanistan with 7 million tons worth $2.2 billion. These five countries imported more than 80 million tons of non-oil goods worth $25.7 billion,” he was quoted as saying by Mehr News Agency.

China, Iran’s biggest trading partner, accounted for 26% of Iran's total non-oil exports, as 26.58 million tons of non-oil goods worth $8.95 billion were shipped from Iran to China during the period. Pistachio, nuts, minerals, construction materials, methanol, carpet, iron ore, glassware and fruits were the main types of goods exported from Iran to China in the last fiscal year.

Imports from China totaled 3.54 million tons worth $9.76 billion during the year to March 21, 2021, to account for 10.6% of the total volume of Iran's imports and 25.3% of the total value of imports during the period. Industrial machinery and raw materials, medical equipment, paper, wood, textile, auto parts and sports equipment were Iran's main imports from the South Asian state in the fiscal 2020-21.

“Iran’s foreign trade reduced by 25 million tons due to sanctions and the Covid-19 pandemic,” he said, adding that the country’s trade deficit stood at $4 billion.

Mirashrafi noted that a total of 23.1 million tons of essential goods, including corn, cellphones, rice, soymeal, oilseeds, wheat and unprocessed oils, worth $12 billion were imported during the period under review.

Iran imported 3.5 million tons of essential goods worth $9.7 billion from China, 5 million tons worth $9.6 billion from the UAE, $4.3 billion from Turkey, 2.2 million tons worth $2.1 billion from Indi, and 1.2 million tons worth $1.8 billion from Germany in the year to March 20.

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