Iran’s Trade on the Brink of Collapse
Iran’s Trade on the Brink of Collapse
A report from the Iranian Parliament Research Center on Iran’s foreign trade in the first half of 2024 indicates a trade deficit of seven billion dollars, marking the worst six-month trade balance for the country in recent years. According to the report, during this period, the country’s import volume reached 33 billion dollars, while exports were about 26 billion dollars. The report also emphasizes that the growing trend of this deficit began in 2021 and has continued to date, highlighting that from 2011 to 2018 the trade balance improved, but from 2018 onwards, it turned negative again.
The downward trend in Iran’s trade balance began precisely when Donald Trump, in May 2018 during his first term, withdrew from the nuclear agreement with Iran involving six world powers and launched a campaign of maximum pressure against the Islamic Republic by imposing severe sanctions. In his second term, starting January 2025, despite initiating negotiations with Iran, he has revived this campaign. The decrease in the prices of Iran’s export goods compared to the increase in the prices of imported goods has been another major reason for the country’s trade deficit. In other words, the value of the goods Iran exports has become less than the value of the goods it imports.
The report from the Iranian Parliament Research Center titled ‘Review of Iran’s Foreign Trade Status in the First Half of 2024’ states that focusing on a few trading partners is a weakness in Iran’s foreign trade. According to this report, over 60% of Iran’s foreign trade is conducted with only three main countries, indicating a dependency on a few specific partners. The share of the top three trading partners, namely the United Arab Emirates, China, and Turkey, has doubled from 2003 to 2023, reaching 62%. The report states that the most important customs export items have been natural gas, petrochemical products, and steel, followed by agricultural exports, stone, and other items with a minor share.
The most important import items for the country in the first half of 2024 have been gold, corn, and mobile phones. Among these, gold imports in the first half of 2024 exceeded three billion dollars, whereas the volume of gold imports in the first half of 2023 was only 466 million dollars. Regarding exports, the most significant smuggling outflow or unofficial export of the country is fuel smuggling. The stability of fuel prices alongside the increase in exchange rates has made the export of this product highly profitable.
According to the Iranian Parliament Research Center report, the smuggling outflow in 2016, when the exchange rate was stable and relatively low, and the prices of gasoline and some energy carriers were somewhat revised, was about half a billion dollars. However, in 2022, with the increase in the exchange rate and the stability of fuel prices for many years, fuel smuggling reached its maximum amount of about 11 billion dollars.