Chairman of Iran’s Trade Promotion Organization Mojtaba Khosrowtaj says Iran’s non-oil export between March 2017 and March 2018 has had a growth of 6.5 percent compared to previous year, but still non-oil export revenues lag behind the projected figure by $6 billion, reported official news agency IRNA on April 4.
The annual non-oil export revenue was projected at $53 billion, but Iran has realized only around $47 billion, the report said.
Nevertheless, the revenue shows a 6.5 percent increase over the figure for previous year, IRNA added.
In Iran’s case, “non-oil exports” also include some oil products such as its ultra-light crude as non-oil products and such items comprise a large part of what Iran calls non-oil exports. This is why Iran is boasting of a relatively high level of non-oil exports.
According to an International Monetary Fund report released on March 8, “Natural resources dominate Iran’s exports representing almost 53 percent of total exports but account only for 12.3 percent of Iran’s GDP. Iran exports more products than the average of MENA countries but many of its products are closely related to the oil sector (such as plastic and rubber products).”
The IMF report estimated the total figure for Iran’s oil and non-oil export at $109,500,000,000. This is $14 billion more than previous year.
According to the IMF, the figure shows a 16 percent rise over the figure for the preceding year, which is largely due to the rise in oil price during the year.
During the same period, Iran’s total import figure (including services) has been $91,500,000,000 with a 15 percent rise compared to previous year, IMF reported, adding that Iran’s trade surplus in the past year was $18 billion.
IMF’s forecast for next year’s export is $130, 300,000,000, with a projected trade surplus of $27 billion.
IMF attributed the rise in export and trade balance to an increase in the amount of oil exported and a rise in oil price over the past year.
Iran’s oil export is expected to rise by 200,000 barrels per day and its output is projected at 2.7 million barrels per day.
However, the country still suffers from very high unemployment, inflation and an insufficient growth rate.
The IMF says Iran needs to expand and intensify its trade with more partners to grow non-oil exports. Improving Iran's export competitiveness, attracting more foreign direct investments, removing barriers to trade and developing bilateral and multilateral trade agreements would aid Iran in reaching its targets for the development of the non-oil export sector.”
However, IMF observed that Iran's overall level of real non-oil exports, as a share of GDP and the degree to which it trades with other countries is low.
Non-oil exports represent only 11 percent of GDP, in line with other oil exporting countries (who on average export 10.4 percent of GDP). But this percentage is low compared to upper middle-income countries (who on average export 24.2 percent of GDP).
The low volume of non-oil exports by Iran reflects the legacy of import substitution, a reliance on domestic markets, and the impact of sanctions.
Iran trades with relatively few countries. Iran exports its non-oil products mainly to the largest economies in Asia), with 37 percent of its non-oil exports going to China. Exports to Europe—which represent a non-oil market 40 percent larger than the Asian one—remain subdued.