Coronavirus Expected to Cut Exports from Iran
EghtesadOnline: Iran has to prepare for a 30% decline in its export value in the current Iranian year (March 2010-21) compared with last year, due to the impacts of the spread of coronavirus on domestic and foreign trade, a member of Iran Chamber of Commerce, Industries, Mines and Agriculture’s board of directors said.
“Under the current circumstances, it is estimated that the country’s exports will fall by $10-12 billion compared with last year and the main products that will experience a plunge due to the pandemic are petrochemical, steel and mineral products, tiles, ceramics and nuts,” Pedram Soltani was also quoted as saying by ISNA.
According to Mehdi Mirashrafi, the head of the Islamic Republic of Iran Customs Administration, Iran’s non-oil foreign trade stood at $85 billion in the fiscal 2019-20, of which exports accounted for $41.3 billion and imports for $43.7 billion.
Oil-based products and byproducts as well as petrochemical products are included in IRICA's non-oil export data. In fact, petrochemicals and gas condensates constitute the greater share of total exports.
Noting that Iran traded over 169 million tons of goods last year, the IRICA chief said exports weighed 133.9 million tons—three times more than imports in terms of weight and about 13.5% more than in the previous year. In terms of value, however, exports show a 7% decline year-on-year.
“Imports reached 35.3 million tons in the fiscal 2019-20, indicating a 9.3% growth year-on-year. A $2.4-billion trade deficit was registered for the country during the period. Raw materials, machinery and intermediate goods accounted for 85% of the imports,” he was quoted as saying by Mehr News Agency.
Mirashrafi noted that petrochemicals made up the lion’s share of exports, which indicates that the country is moving from being dependent on selling unprocessed goods toward exporting petroleum products.
“However, the fact that each ton of Iran’s imports was valued at $1,220 while each ton of exports was worth only $309 indicates that exports of unprocessed goods continue to pose a challenge for Iran’s economy," he said.
According to Soltani, prices of Iranian products have increased as a result of the rise in the prices of raw materials, noting that the economy will continue to struggle with high inflation rates in the year ahead.
The Statistical Center of Iran's latest report shows the average goods and services Consumer Price Index in the 12-month period ending April 19, which marks the end of the first month of the current Iranian year, increased by 32.2% compared with the corresponding period of the year before.
Consumer inflation for the month under review (March 20-April 19) registered a year-on-year increase of 19.8% compared with the similar month of the previous Iranian year.
The overall CPI (using the Iranian year to March 2017 as the base year) stood at 204.8 last month, indicating a 2.1% rise compared with the month before.
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 remain unaffected.
“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 face limitations in exporting commodities to the neighboring country,” Soltani ssid.
China was Iran’s main export destination last year, as it imported $9.5 billion worth of non-oil goods from Iran. It was followed by Iraq with $8.9 billion, Turkey with $5.4 billion, the UAE with $4.5 billion and Afghanistan with $2.3 billion.
The country was also the biggest importer from Iran last year. The Asian country sold $11.2 billion worth of non-oil goods to Iran last year.
The UAE with $8.9 billion, Turkey $4.9 billion, India $3.6 billion and Germany with $2.1 billion worth of exports to Iran were other main importers from Iran.
Iran was the biggest exporter to Iraq in the fiscal 2018-19.
Soltani noted that based on World Trade Organization’s prediction, world trade will plunge by 13-32% in 2020 (best- and worst-case scenario), noting that it is likely that the economic crisis awaiting the world now will be more intense than the one experienced during the 2008 Great Depression.