A brief overview of Iran’s neighbors importing situation

Category: Blog Published: Tuesday, 18 December 2018
A brief overview of Iran’s neighbors importing situation

According to the World Trade Organization (WTO) statistics, Iranian market neighbors, including Iraq, Turkey, Armenia, Azerbaijan, Turkmenistan, Afghanistan and Pakistan, in 2017 accounted for a total of about $ 336 billion, but the share of non-oil production from this large market were only $ 11 billion.

Countries in the world are always looking at the markets of their neighboring countries as the most accessible market for the export of their goods, and statistics from international organizations also indicate that the volume of trade of countries with their neighbors in most cases is significantly more than the volume of their trade with other countries. Import to Iran or export from Iran is included as well. Small and medium enterprises in each country will benefit most from developing exports to adjacent countries, as these firms prefer financial constraints rather than looking for markets of several thousand kilometers, their goods through land borders and rail lines exports to nearby countries. Iranian market, also considering that it is a developing market, has always been trying to increase its economic growth by exploiting opportunities and capacities in neighboring countries by export from Iran. However, some structural problems have caused Iranian market fail to gain significant share of the market in some of the neighboring countries.
According to World Trade Organization statistics, Iranian market’s neighbors include Iraq, Turkey, Armenia, Azerbaijan, Turkmenistan, Afghanistan and Pakistan, in 2017 totaled about $ 336 billion worth of goods from other countries. Of course, it should be noted that the World Trade Organization has recorded and owns all its members' import and export statistics, but for countries that are not members of this organization, import and export statistics are estimated using import and export statistics of the countries like the member markets. However, in the case of bilateral trade, countries that are not members of the WTO e.g. Iran and Iraq, there is no statistical data in the organization's database, and the organization is unable to estimate and quantify a fairly approximate estimate of their trade. However, much better data is gathered over International Trade Center out of Iranian market. The statistics of the Islamic Republic of Iran, however, show that the value of Iran's non-oil exports to these countries totaled about $ 11 billion in 2017, which is a negligible figure with respect to imports of nearly $ 400 billion. Among the neighbor markets of Iranian market, Turkey is considered to be a very good import market due to its favorable demographic conditions and domestic product of more than $ 2 trillion based on purchasing power. Although the country is currently the second most important destination for non-oil exports in Iran, last year Iran's non-oil exports to Turkey were only about $ 3.2 billion, less than 2 percent of total imports. Countries such as China, Germany, Russia and the United States have had the largest share of the major Turkish import market.
Pakistan imports from Iran were the next by $ 47 billion in 2017 after Turkey, the second most important import market among Iranian market neighbors. Although Pakistan is considered one of the world's low-income countries per capita GDP, the population of more than 200 million people can make the proper import market for Iran. However, Iran's exports to Pakistan last year were only about $ 800 million, and less than 2% of its import market share reached Iranian producers.
Iraq, based on its rich oil revenues, is the third largest importer of goods among its neighbors. Iran, with exports of more than $ 6 million worth of goods to Iraq, is considered the third largest exporter to the country, although the figures for the same reason as previously stated (non-membership of both countries in the World Trade Organization) are not included in the WTO database. With the imminent end of the Iraq civil war and the beginning of the reconstruction of damaged areas, Iraqi imports will certainly increase from other countries, and Iran should take advantage of this opportunity.
The Republic of Azerbaijan, as an oil-rich and rapidly developing country, is currently ranked fourth in terms of total import value among neighboring countries of Iran. Last year, the country spent more than $ 7 billion on imports, with Iranian exporters absorbing only about 5 percent of that amount. Iran, with $ 359 million worth of exports to Azerbaijan, was ranked sixth among the largest exporters in the country, but for the same reason (no WTO membership), the name of Iran is not seen among exporters of goods to Azerbaijan.
Afghanistan has always been a major trading partner for Iran. Significant cultural influences between the two countries and the proper understanding of each other's markets have caused no country to compete with Iran in the Afghan market. Last year, Iran exported more than $ 2.4 billion worth of goods to Afghanistan, which is about 80 percent higher than Pakistan's exports to the country, although again due to the lack of membership of both Iran and Afghanistan in the World Trade Organization before 2017, there is no statistical evidence of bilateral trade between the two countries at the WTO dependent sites. It is worth mentioning that Afghanistan joined the WTO in the second half of 2017.
Turkmenistan is economically more prosperous compared to other Iranian soil neighbors (except Turkey), but because of its small size, its import market is not so big. Of course, the country also has a lot of cultural influences with Iran, and Iran can increase its share of the import market by relying on this advantage. According to the official statistics of the Islamic Republic of Iran, the value of Iranian exports to Turkmenistan last year was about $ 578 million, which makes Iran the third-largest exporter to Turkmenistan. Of course, the same statistical problem applies to Turkmenistan, and in World Trade Organization databases.
According to the size of the Iranian import market, Armenia is among the last among the Iranian soil neighbors. This small and small country in 2017 has imported just over 3.6 billion dollars from other countries, although a country like Russia has been able to export about $ 1 billion worth of goods to this small market. Iran's exports to Armenia in 2017 were estimated at 184 million dollars by the Customs of the Islamic Republic of Iran, and the World Trade Organization estimates the value of imports of Armenia from Iran in 2017 by about 171 million dollars, according to the organization, Iran ranked third among the top exporters to Armenia.
As noted earlier, penetration of neighboring markets could accelerate Iran's economic growth by providing export opportunities for small and medium-sized enterprises. While some industries over Iranian market suffer from stagnation and demand for domestic markets is not enough to meet their productive capacities, opening up new markets can revitalize hopes of getting out of recession in the domestic firms. Although Iran's share of its neighbors' import market is currently low, it is possible to restore at least part of the lost business by adopting appropriate measures to expand the win-win relationship with its neighbors. Undoubtedly, the ability of Iranian producers to reach a much larger share than the current 4% share of the import market of neighboring countries is improving.


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