IN THE NAME OF GOD

FORECASTING THE CHANGE OF TRADING PARTNERS OF IRAN WITH EMPHASIS ON CONTINUING SANCTIONS

IN HORIZON OF FIFTH DEVELOPMENT PROGRAM

Summer 2014

Summary of this studyNon-oil exports as a communication channels of Iran’s economy with the world is one of the factors

affecting on Iran’s economy, therefore, an extensive explore and study is needed that expand the

non-oil exports and diversify the country's export earnings, in order to reduce the vulnerability of

objectives of development’s economic of country is needed. In this paper an attempt has been to

review and forecast process of change Iran's major trade partners on non-oil exports from 1996 until

the end of the fifth development plan. For this purpose, share of the Iran’s trade partners from

export of agricultural products as part of the non-oil exports were studied by using the data of the

Customs Administration of Iran over the period 1996-2012, then process of change the trade

Partners since 2015 were predicted by using econometric techniques with regard to sanctions.

Mahdi Bastani and Ebrahim Ensan

Importance of Exports

The role and importance of the non-oil exports development, especially

the non-oil export in the process of economic development is widely

accepted. Export development providing currency resources for

economic development and can be determining role in shaping

economic structures, optimal allocation of resources, advantage of

economies of scale in production, access to international expertise and

etc.

IMPORTANCE OF EXPORTSIMPORTANCE OF EXPORTS

Exchange

Revenue

Non-oil Exports and Development Programs

During the first, second and third-economic developments program of the country,

condition of the Iran’s non-oil export were lower than expected, but in the fourth

development plan, non-oil export as an effective and key component in economic

development and also in preparation of the social and cultural infrastructure for

employing exports strategy has been emphasized, so in this respect the

performance of non-oil export is indicative of the success of policies adopted, so

that in the third development plan achieving the desired goals about 92%, and the

figures for the fourth development plan to nearly 149 percent.

This situation indicate that exports in the context of

development was risen and government policies have a

positive impact on exports trend, so that in end of the fifth

development plan was expected that the country's export had

to reach $ 300 billion.

WHAT IS THE QUESTIONWHAT IS THE QUESTION??

•How will change How will change the share of trading the share of trading

partnerspartners in the future, if these in the future, if these

sanctions will continue?sanctions will continue?

DATADATA: :

Germany's share of agricultural products export during the period 1996-2012

Source: Data released by the Islamic republic of Iran customs administration

Emirate’s share of agricultural products export during the period 1996-2012

Source: Data released by the Islamic republic of Iran customs administration

Iraq's share of agricultural products export during the period 1996-2012

Source: Data released by the Islamic republic of Iran customs administration

Hong Kong's share of agricultural products export during the period 1996-2012

Source: Data released by the Islamic republic of Iran customs administration

Afghanistan's share of agricultural products export during the period 1996-2012

Source: Data released by the Islamic republic of Iran customs administration

FORECASTING METHOD

RESULTS AND DISCUSSIONTable 1. Unit Root Test Results

Test ResultsSignificant

LevelAmount of

ComputationalCritical Value

Test Variables

I(1) 1% 5.54- 4.72- ADF HK

I(1) 10% 3.53- 3.32- ADF Irq

I(1) 10% 3.60- 3.36- ADF Afg

I(2) 10% 3.64- 3.34- ADF UAE

I(1) 10% 3.83- 3.38- ADF Ger

Error Percentage of Forecast in ARMAX MethodOutsourcer-sample

Forecast ErrorWithin-sample Forecast

ErrorForecasting Method Variable

1.68 % 2.26 % ARMAX (0, 0, 5)

HK- 30.12 % single

- 28.98 % double

0.41 % 2.87 % ARMAX (2, 0, 5)

Irq- 4.48 % single

- 14.55 % double

0.09 % 0.44 % ARMAX (2, 0, 4)

Afg- 12.90 % single

- 5.93 % double

0.79 % 4.92 % ARMAX (1, 0, 2)

UAE- 10 % single

- 12.92 % double

0.99 % 3.93 % ARMAX (2, 0, 5)

Ger- 34.65 % single

- 41.13 % double

ADF Test Results for the Fitted Residual

t-Statistics Residuals-5.32* Res HK

-7.49* Res Irq

-4.24* Res Afg

-8.78* Res UAE

-5.92* Res Ger

*Significant in 1%

Predicted Values by the ARMAX Method

Mean 2015 2014 2013 Method Variable

6.42 % 6.29 % 5.59 % 7.39 % )0,0,5(ARMAX HK

29.2 % 27.56 % 28.71 % 31.33 % )2,0,5(ARMAX Irq

7.38 % 7.09 % 7.39 % 7.68 % )2,0,4(ARMAX Afg

14.17 % 14.67 % 14.22 % 13.63 % )1,0,2(ARMAX UAE

4.81 % 5.23 % 4.75 % 4.45 % )2,0,5(ARMAX Ger

Policy implications to the government:Identifying potential business opportunities in new markets and introduce

them to traders and merchants of private sector.

Trying to eliminate non-tariff barriers on the way to development of trade.

Trying to for the conclusion of "free trade agreements" with other

countries.

Thank you very much Thank you very much

for your attentionfor your attention