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Iran Export-Led Growth Strategy Depends on Sanctions Relief

The government of President Hassan Rouhani is seeking to boost Iranian exports in order to grow the economy.
Arab League Secretary General Nabil El-Araby speaks at a news conference on the Syrian crisis, after the Arab foreign ministers meeting at the Arab League headquarters in Cairo September 2, 2013. Arab states on Sunday urged the international community to take action against the Syrian government over a chemical gas attack that killed hundreds of civilians. REUTERS/Amr Abdallah Dalsh  (EGYPT - Tags: POLITICS CONFLICT) - RTX134KS

Iranians have traditionally been merchants and more active in importing goods and services than in developing export opportunities. Easy petrodollars used to pay for imports of all kinds, so there was little need to expand non-oil exports for the economy's sake. Over the past few years, however, as a logical response to external sanctions, Iranian traders have tried to develop export ideas to make their overall trade (especially imports) independent of the country’s banking system. This effort was further facilitated by the devaluations of the rial in 2011 and 2012 that made Iranian exports more competitive on regional and international markets.

The growth of non-oil exports and the concurrent decline in imports (as a result of sanctions) paved the way for the government to announce the goal of achieving “balanced non-oil trade” (a balance between imports and all exports with the exception of crude oil, gas condensates and natural gas). For example, in the first six months of the current Iranian fiscal year (which began on March 21), Iran imported $19.2 billion of goods and services while its non-oil exports amounted to $17.9 billion. Although the ultimate goal has not been achieved, it is valid to say that Iran has managed to grow its export potential, especially to regional markets, that is, the Iraqi, Central Asian, African and Asian markets. Based on the latest statistics from the Ministry of Industry, Mining and Trade, Iran’s industrial exports grew by an annual average of 6.7% during the period 2005 to 2012.

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