Global trade situation as the economic development engine leads to more efficient usage of potential economic capacities and guide investors to choose the most profitable plans. On the other hand, there is not any consensus on the interaction between business policies and economic growth rate but based on new theories and endogenous growth patterns, international trade can affect the economic growth rate through changing some factors like technology and resources.
According to Iran’s customs statistics and Iran’s GDP growth data for last 6 years (2011-2016), direct impact of foreign trade on GDP growth is shown in the charts below using Eviews software. The estimated model displays the GDP growth changes following foreign trade changes well with about 99% confidence and the other factors have been kept constant.
Source: www.irica.gov.ir / www.worldbank.org
*Estimated model: GDPG= -16.59 + 0.000182FT (GDPG=GDP Growth, FT=Foreign Trade)
Iran’s foreign trade performance during first 7 months of current solar year (1396) was about 52,527 million Dollars with a growth of 6.2% compared to the same period last year. Total import and non-oil export of Iran were 27,817 million Dollars (with a growth of 14.89%) and 24,710 million Dollars (with a decrease of 2.17%) respectively in this period of time. Major import items were: rice (1 billion Dollars), corn (882 million Dollars), auto parts (738 million Dollars), motor vehicles (625 million Dollars) and soybean (536 million Dollars) while gas condensate (4,115 million Dollars), Propane liquefied (809 million Dollars), Polyethylene film grade (750 million Dollars), Methanol (661 million Dollars) and other light oils except petrol (725 million Dollars) were considered as the major export items. It should be noted that major export purposes include China (5,022 million Dollars with a growth of 12%), Iraq (4.013 million Dollars with a growth of 12.54%), United Arab Emirates (3,471 million Dollars with a decrease of 16.11%), Republic of Korea (2,444 million Dollars with a growth of 24.79%) and Afghanistan (1,584 million Dollars with a growth of 16.11%) and about major import purposes can point to China (6,820 million Dollars), United Arab Emirates (4,678 million Dollars), Turkey (1,933 million Dollars), Republic of Korea (1,844 million Dollars) and Germany (1,540 million Dollars).
The mentioned data about first 10 months of current solar year (1396) has been published by Islamic Republic of Iran Customs Administration too which has shown in the table below (all units are in million Dollars):
All in all, one of the main challenges of Iran’s economy which has to led to higher cost of goods sold and therefore more import is production less than nominal capacity. The mentioned problem can be solved by some approaches like decrease in facilities rate, exchange rate and transport cost. According to the latest World Bank forecast, Iran’s economic growth will hit 4.3% in 2020 because of JCPOA and following that easier accessibility to the financial markets and increase in oil production. As a result, improvement in the foreign trade situation can be appeared as a factor which will influence the mentioned economic growth rank.