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EghtesadOnline: Iran’s non-oil foreign trade stood at 110 million tons worth $52 billion during the nine months ending Dec. 20.

According to Mehdi Mirashrafi, the head of the Islamic Republic of Iran Customs Administration, exports were at 85.2 million tons worth $25.1 billion and imports at 25 million tons worth $26.8 billion during the period. 

Compared with the corresponding period of last year (March 21-Dec. 21, 2019), exports registered a 17% and 20% decline in weight and value respectively, while imports show a 1% and 16% decline in weight and value year-on-year, he was quoted as saying by ILNA. 

Iran’s main export destinations over the period included China with 20.6 million tons worth $6.4 billion, Iraq with 20.8 million tons worth $5.9 billion, the UAE with 11.4 million tons worth $3.3 billion, Turkey with 5.4 million tons worth $1.8 billion and Afghanistan with 5.2 million tons worth $1.7 billion.

The main exporters to Iran were China with 2.6 million tons worth $7 billion, the UAE with 3.5 million tons worth $6.3 billion, Turkey with 3.5 million tons worth $3 billion, India with 1.8 million tons worth $1.6 billion and Germany with 911,000 tons of goods worth $1.3 billion.

Mirashrafi said a total of 5.2 million tons of cargo were transited across the country over the period, indicating a 10.9% decline YOY. 



Monthly Trade

Iran’s foreign trade reached $7.4 billion in the month leading to Dec. 20. 

According to a report by the Persian economic daily Donya-e-Eqtesad, the monthly export hit 10.2 million tons worth $3.6 billion and imports reached 3.2 million tons worth $3.7 billion, indicating a trade deficit of $100 million for the country. 

Compared with the previous month, exports show a 9% and imports indicate a 19.4% growth, however exports decreased by 26% but imports increased by 7.2% year-on-year.



Essential Goods

Imports of essential goods accounted for 17.5 million tons of the total imports (25 essential items constituted 70% of imports in terms of weight), the IRICA chief said.

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

Amid high inflation and diminished purchasing power, the Iranian government has sought to ensure a steady supply of essential goods at subsidized prices.

Following the re-tanking of the national currency in early 2017, the government introduced stringent rules like banning the import of non-essential goods, especially those produced inside the country (known as Group IV goods). It allocated subsidized currency at the rate of 42,000 rials to a dollar to 25 categories of goods (otherwise known as Group I or essential goods) to help protect consumers against galloping inflation, rampant price gouging and hoarding, not to mention the high and rising cost of living.

Two other categories of imports were also defined: Group II that mostly included raw materials, intermediate and capital goods, and Group III consisting of essential consumer goods. 

Importers of products in Group II were to meet their forex requirements from the secondary forex market, known by its Persian name Nima. Group III importers could buy hard currency from exporters who were not required to offer their forex earnings on Nima.

In the last fiscal year (March 2019-20), the government removed five items, namely red meat, butter, pulses, tea and sugar from the list of basic goods entitled to subsidized currency. 

So far, vegetable oil, oilseeds, corn, barley, soybean meal, raw material for manufacturing tires, heavy-duty vehicle tires, paper pulp and different types of paper are still considered essential goods. 

A total of 25.09 million tons of essential goods worth $15.5 billion were imported into Iran during the last fiscal year (March 2019-20) to register a 20.77% and 17.13% increase in weight and value respectively compared with the year before.

According to IRICA Spokesman Rouhollah Latifi, this amount of essential goods imports accounted for close to 71% and 35% of the volume and value of last year’s total imports respectively.

“The imported essential commodities included wheat, sugar, corn, rubber, barley, processed tea, rice, different kinds of seeds, red meat, soybeans, pulses, paper, fertilizers and industrial machinery,” he added.

Imam Khomeini Port in the southern Khuzestan Province is the main hub for the import of essential goods in Iran. The port, according to Adel Deris, director general of Khuzestan’s Ports and Maritime Organization, possesses 40 wharfs, 140 kilometers of railroads within its premises and is equipped with the latest loading and unloading facilities.

Close to 90% of Iran's demand for livestock feed raw material as well as 79% of grains are imported through this southern port.

The government plans to continue subsidizing essential goods in the next fiscal year (March 2021-21). 

According to Vice President Mohammad Baqer Nobakht, who doubles as the chairman of Iran’s Plan and Budget Organization, the government will channel earnings from the export of oil to import essential goods at the subsidized rate of 42,000 rials per US dollar.



Coronavirus, Sanctions

Global trade has dropped by 30% following the outbreak of coronavirus and Iran was no exception. 

“Seven countries, including China, Iraq, Afghanistan, the UAE and India, account for 75% of our foreign trade. Over 50% of Iran’s non-oil exports are headed to Iraq and China, all indicative of our export vulnerability," Majid Reza Hariri, the chairman of Iran-China Chamber of Commerce, was quoted as saying recently.

“Natural gas, gas condensates, petrochemicals and unprocessed minerals make up 70% of Iran's exports. Covid-19 has pushed down the demand for and the prices of these export items,” he said.

“For our production lines to remain operational, about $45 billion worth of essential goods, pharmaceuticals and medical equipment need to be imported. Given the restrictions placed on oil sales, this figure appears to be unreachable.” 

Pedram Soltani, a member of Iran Chamber of Commerce, Industries, Mines and Agriculture’s board of directors, recently said Iran has to prepare for a 30% decline in export value in the current Iranian year (March 2010-21) compared with last year due to the impact of the spread of coronavirus on national and international trade.

“Under the current circumstances, it is estimated that the country’s exports will fall by $10-12 billion compared with last year. The main products that will experience a plunge due to the pandemic are petrochemicals, steel, mineral products, tiles, ceramics and nuts,” he was quoted as saying by ISNA.

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 as well as the nosedive in oil prices will make Iraq, our second biggest export destination, very cautious and we will be facing limitations on the commodities we can export to the neighboring country,” he added. 

Soltani noted that based on World Trade Organization’s prediction, world trade will see a 13-32% plunge in 2020 (best- and worst-case scenarios), noting that it is likely that the economic crisis awaiting the world now will be more intense than the one experienced in 2008.


Iran foreign trade Non-Oil