Iran's Trade With Turkey Rises 75% to Over $4.2 Billion in 11 Months

EghtesadOnline: Iran and Turkey registered $4.29 billion in trade from the beginning of 2021 to the end of November to register a 75.95% growth compared with last year’s corresponding period.

News ID: ۷۸۷۵۵۹

04 January 2022

Iran exported goods worth $2.22 billion during the period, up 147.42% year-on-year, while imports from Turkey grew by 34% YOY to $2.07 billion, latest data by Turkish Statistical Institute show.

Iran and Turkey exchanged $440.82 million worth of goods and commodities in November 2021, 84.81% higher than the value registered in the same period of last year.

Iranian exports to Turkey accounted for $292.66 million of the sum, up 147.42% YOY while Turkey’s exports to Iran stood at $219.3 million, up 26.41%.

Monthly trade between Iran and Turkey fell below $300 million in September 2020, mostly due to a decline in Iran's exports to the neighboring country, following Covid-19 restrictions. However, trade started to improve in December, raising hopes for recovery from the impact of the pandemic on bilateral trade.

Bilateral trade stood at $3.43 billion in 2020, registering a decrease of 45.82% compared with 2019.

Iran exported $1.192 billion worth of goods to Turkey in 2020 to register a 66.9% year-on-year decline while imports from Turkey stood at $2.245 billion, down 17.97% YOY.

Turkey’s collective value of exports amounted to $169.482 billion down 6.3% while imports hit $219.397 billion in 2020, up 4.3%, compared with 2019.

Agreement to Boost Ties Signed on ECO Summit Sidelines

Turkey and Iran signed an agreement to improve relations in a meeting held at the 15th Economic Cooperation Organization summit held in Turkmenistan's capital Ashgabat in late November.

Iranian Foreign Minister Hossein Amir-Abdollahian said on Twitter that Iranian President Ebrahim Raisi and his Turkish counterpart Recep Tayyip Erdogan also agreed to convene a high commission meeting during Erdogan's next visit to Iran's capital Tehran, Daily Sabah reported.

Describing relations between the two countries as "historic", Amir-Abdollahian said "it was agreed to talk about the comprehensive improvement of relations and the removal of obstacles".

Raisi and Erdoğan held a closed-door meeting as part of the summit.

Preferential Trade Agreement

Finalizing ongoing negotiations with Iran for the expansion of the bilateral Preferential Trade Agreement is a priority for Turkey, Energy and Natural Resources Minister Fatih Donmez has said.

The trade deal came into effect on Jan. 1, 2015, and negotiations have been ongoing to expand the pact by increasing the number of products traded between Turkey and Iran, Donmez told the virtual 28th Turkey-Iran Economic Commission convened earlier this year, Daily Sabah reported.

Customs cooperation was another topic up for discussion at the meeting. Both sides agreed to an electronic data interchange protocol to carry out a simplified customs frontier project and the mutual recognition of an Authorized Economic Operator project.

These projects will have a positive impact on foreign trade volumes by enabling easier and faster trade while eliminating bureaucratic procedures based on mutual trust, he stressed.

Both sides agreed that technical teams would meet in the near future to put the plans into action.

“The sides also agreed on increasing fairs and trade delegations between Turkey and Iran to show our [Turkey’s] concrete support and the great importance attached to cooperation between private sector representatives,” he said.

Support for the activities of the Turkey-Iran Business Council and other private sector establishments, notably small- and medium-sized enterprises, would also continue, particularly after the pandemic, Donmez said.

Consequently, both sides agreed to commit to talks on developing an “action plan” between the Small and Medium Enterprises Development Organization of Turkey and its Iranian equivalent, Iran Small Industries and Industrial Parks Organization.

Donmez concluded that the commission also addressed other areas of cooperation, including health, energy, transportation, education, environment, agriculture and forestry.

Gov’t Urged to Support Exporters Against Lira Depreciation

The depreciation of the Turkish lira against the dollar threatens to rob Iranian exporters off of their competitive edge in regional markets where Turkey is considered Iran’s main rival, says the head of the Trade Facilitation and Export Expansion Commission of Tehran Chamber of Commerce, Industries, Mines and Agriculture.

“We call the government into urgent action to support exporters, by providing right incentives in a timely manner,” Mohammad Lahouti was also quoted as saying by TCCIM’s news portal.

Noting that lira’s depreciation will increase Turkey’s exports, he said the neighboring country is a tough rival for us in the region, especially in Iraq, Russia and the CIS (Commonwealth of Independent States) region. “Turkey’s policy has for long been to produce goods suitable for exports, therefore they have created considerable infrastructure in this field over the years. On top of that, the Turkish government allocates export incentives to it traders in a highly efficient way,” he added.

The official noted that Turkish trader’s power to compete in international markets has, for years, been more than that of their Iranian counterpart.

“And now a cheaper lira will make their [Turkish exporters’] end prices more affordable in destination markets. The Iranian rial also experienced the same, but not long after it started to depreciate, economic sanctions were re imposed … which deprived us of possible benefits of a cheaper rial,” he added.

Lahouti called on the government to increase support to traders.

Turkey's lira tumbled 5% on Monday after suffering in 2021 its worst year since President Erdogan came to power nearly two decades ago, with concern persisting over surging inflation and unorthodox monetary policy, Reuters reported.

The lira weakened as far as 13.92 against the dollar from a close of 13.1875 on Friday.

Market attention was focused on December inflation figures, set for release at 0700 GMT, after data at the weekend showed retail prices in Istanbul jumped 9.65% month-on-month in December for an annual rise of 34.18%.

According to a Reuters poll, annual inflation is expected to have hit 30.6% in December, breaching the 30% level for the first time since 2003. The lira was by far the worst performer in emerging markets in 2021, as well as in the last few years, and lost 44% of its value against the US currency over the year. It weakened 19% last week alone.

The central bank has slashed its policy rate by 500 basis points since September, under pressure from Erdogan as he pushed a "new economic program" focused on credit and exports despite the lira's collapse and rising inflation.

To curb lira’s weakness, Erdogan unveiled a scheme three weeks ago in which the state protects converted local deposits from losses versus hard currencies, sparking a sharp 50% rally in the lira with support from the central bank.

But the lira then sank again last week, prompting a call on Friday from Erdogan - whose opinion poll ratings are sliding ahead of an election in 2023 - for Turks to keep all their savings in lira and shift gold into banks.