In the last few years, amid economic decline and hardships, one positive indicator has been the Iranian economy’s continuous trade surplus. Many expected the country’s export performance to collapse as a result of external sanctions. However, the sharp decline in crude oil exports was compensated for by the decline in imports and the modest growth in non-oil exports.
According to the March 2014 issue of Eqtessade Iran magazine (Iran Economics), the country’s trade surplus is projected to reach $40 billion in the Iranian year 1392 (that ended on March 20), up from $31 billion the previous year. Furthermore, growing exports will lead to a trade surplus of $62.5 billion in the new Iranian year 1393. In this picture, Iran’s non-oil exports — meaning all exports with the exception of crude oil and gas — will grow from $33 billion in 1392 to $37.7 billion in 1393. Based on the projections of Iran Economics magazine, non-oil exports will have a 11.5% share in the country’s nominal gross domestic product (GDP) in the new Iranian year. In 2009, non-oil exports represented a 7.2% share in the country’s GDP, only to fall as a result of sanctions and currency devaluation. The hardest hit non-oil export sectors were the petrochemical and automotive industries. Incidentally, the so-called plan of action agreed upon by Tehran and the P5+1 introduced a suspension of sanctions on the two mentioned sectors.
A growing trend can be detected in the export performance of Iranian companies, not just as a result of partial sanctions relief, but as a consequence of the change of government, a more confident business community and stability in exchange rates and export laws. Evidently, the country has a major competitive advantage in all industries that rely on gas, and related exports are on the rise. However, the exports in the service sector (especially the export of engineering services) are also growing. It is expected that Iran will export $7.1 billion in services in 1393, up from $6.2 billion the previous year.
Expanding non-oil exports has been one of the recurring objectives of Iranian governments in the past two decades. However, unleashing the true potential of Iran’s non-oil export potential would require major reforms that were outlined in Al-Monitor in October 2013. In this piece, we will look at the key sectors that have the potential to contribute more to the country’s export performance.
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