Newsletter headings of "Mercury"

Economic situation

The Islamic Republic of Iran is located in Southwest Asia. It borders Türkiye (486 km), Armenia (40 km), Azerbaijan (767 km) and Turkmenistan (1206 km) to the north, Afghanistan (945 km) and Pakistan (978 km) to the east, and Iraq (1609 km) to the west. The Caspian Sea washes its northern shores (657 km), and southern shores are washed by the Persian Gulf, the Strait of Hormuz, and the Gulf of Oman (2043 km). In the Persian Gulf, Iran owns the islands of Kharg (the main oil export terminal), Qeshm, Kish, Lavan, and Sirri (free economic zones); in the Strait of Hormuz, there are the islands of Abu Musa, Greater and Lesser Tunb.

Iran is an economically developed country, one of the largest economies in the region in terms of GDP, ranked 15^th in the world in terms of GDP (PPP) by the end of 2023 (according to the International Monetary Fund). Economic development is driven by rich natural resources: the country possesses the largest deposits of natural gas and ranks third in terms of conditional reserves of crude oil, boasts vast reserves of copper, iron, zinc and lead, as well as a strategic location that facilitates trade and transit.

The main sectors of Iran's economy are energy, petrochemicals, gas industry, construction, metallurgy and non-ferrous metals industry, mechanical engineering, textile and food industry. One of the key sources of income for the country is oil and gas export.

At the same time, in recent years, under the influence of the sanctions imposed on the country, Iran has been taking steps to diversify its economy and develop some oil-independent sectors, such as industry, tourism, agriculture, and high technology. Investments are being directed into infrastructure and research and development projects, as well as into the development of the information technology and innovation sector. As a result, the country's economy is growing for a fourth consecutive year aided by the recovery in the oil sector and despite ongoing economic sanctions.

In recent years, Iran has been taking steps to improve its investment climate and attract foreign investment. Reforms have been undertaken to simplify procedures for setting up and doing business, reduce bureaucracy, protect intellectual property and provide legal protection for foreign investors.

According to the data for 2023, Iran's GDP amounted to 368 billion US dollars. According to the World Bank, Iran's economic growth in 2023 was 4.2 percent, which is higher than the global average.

At the same time, GDP in 2024/25 is now forecast to grow at a more moderate rate due to the projected slower growth in government expenditures and the base effect of the larger oil GDP growth in 2023/24.

Foreign economic activity

Despite sanctions, Iran is a major participant in foreign economic activity both within its region and globally.

The state actively cooperates with neighboring countries and other countries to develop its foreign economic activity. It participates in international economic organizations, such as OPEC, SCO, ECO, WTO (observer status), IMF, World Bank, IFAD, WHO, UNESCO, UNIDO, IAEA, ILO, ICAO, WIPO, BRICS, and other. It also signs trade and economic cooperation agreements.

In 2022, Iran was number 86 economy in the world in terms of total exports, the number 69 in total imports. Exports in Iran decreased a bit in 2023.

Iran's main exports: crude oil and petroleum products, metal ores, agricultural products.

Main imports: products of heavy engineering and chemical industry, automobiles, iron, steel, mineral raw materials, textiles, paper.

Iran's main trading partners include China, the UAE, Iraq, Türkiye, India, Japan, and the EU countries.

Doing business advantages

There are special trade and industrial zones in Iran, which have the following advantages:

Bilateral trade and economic relations

Over the years of diplomatic relations, Belarus and Iran have achieved a high level of economic cooperation, evidenced by regular contacts at the leadership level. There is an exchange of delegations at the level of ministers and their deputies, experts and business representatives in the fields of industry, agriculture and transport.

The main Belarusian exports to the Islamic Republic of Iran are equipment for the production of pulp and paper, specific goods, longitudinally sawn timber, newsprint in rolls or sheets, equipment for thermal processing of materials, reciprocating internal combustion engines, and bearings.

As for imports, Iran sells dried fruits, nuts, raw materials for medicines, carpets to Belarus.

Until recently, an important economic component of the bilateral relations development was the provision of educational services for Iranian citizens, mainly in medical universities.

Regarding the oil sector, two tranches of Iranian oil were delivered to Belarus. However, this project did not receive further development due to the lack of profitability, as the price of oil supply from Iran to Belarus is quite high, including due to the distance between the countries.

The current relationship between Belarus and Iran has not only a bilateral but also an important geopolitical context. Belarus and Iran are withstanding the external pressure exerted on them and are developing their cooperation. This was stated, in particular, by the Belarusian President Aleksandr Lukashenko at a meeting with Secretary of the Supreme National Security Council of the Islamic Republic of Iran, Ali Akbar Ahmadian, on September 13^th, 2024. The head of state thanked Iran for supporting Belarus' accession to the SCO and emphasized that our country has always been and remains a reliable partner of Iran.

An important resource in terms of expanding Belarus-Iran trade and economic relations is the agreement leading to the establishment of a free trade zone between the EAEU and Iran. This document establishes a list of certain goods for which Belarusian exporters receive tariff preferences for supplies to the Iranian market, in particular, meat and oil and fat products, certain types of confectionery and chocolate, electronic and mechanical equipment, as well as metals and cosmetics.

Promising areas for Belarus-Iran cooperation and business advice

Belarus, with its developed industrial, agricultural, and agro-industrial complex, is ready to offer Iranian partners a wide range of modern high-tech goods.

Among the promising areas where Iran and Belarus have significant potential for cooperation are the following: oil and petrochemical industry, foundry industry and component production, road construction equipment manufacturing, mining industry, agriculture, electronics and instrument engineering, and food industry.

Iran can be considered as a promising direction for increasing Belarusian exports of dairy and meat products (beef, butter, chicken meat, chicken and quail eggs), vegetable oil, combined fodder and premixes for animals, complex technical products, and innovative developments in the food industry and agriculture.

At the same time, Belarusian exporters should take into account some peculiarities of doing business in Iran when entering this market.

It is worth arranging a business meeting in advance (when planning, do not forget to check the schedule of local holidays). Upon arrival in Iran, you should confirm the meeting and be punctual, assuming that the level of representation of the Iranian side at the negotiations will correspond to the level of the Belarusian delegation. The first meeting with potential partners is usually devoted to getting acquainted and discussing general issues rather than deal details (it is extremely important to establish personal contacts with potential Iranian partners). Iranian partners prefer to conclude a contract for the exclusive right to represent exporters in their territory. When choosing a partner, one should take into account their work experience, financial and organizational capabilities, and adapt the tools for promoting products to the local market. It is important to understand that products from Chinese and other Asian companies are already widely represented on the market – the level of competition is quite high. Imports of these products are re-exported from the UAE or directly from producer countries.

The promotion of Belarusian products in Iran can also be facilitated by the active participation of Belarusian enterprises in various specialized exhibition events.

For a detailed study of other areas of the Iranian market in order to determine the potential for entry, it is necessary to consider a specific type of product (HS code) in terms of supply dynamics, import growth rates, tariff regulation, competitive environment, and product cost.