Official: Coronavirus Negative Impacts on Iran Too Little

The susceptibility of Iran’s economy to the negative consequences of the coronavirus epidemic has reached a minimum as the re-imposition of US unilateral sanctions has decreased the country’s share of the global economic cycle, said an Iranian trade official. In May 2018, President Donald Trump pulled the US out of the Joint Comprehensive Plan of Action (JCPOA), signed between Iran and the P5+1 in July 2015, and re-imposed Washington’s sanctions on Tehran. The move by the US, mainly targeting Iran’s oil and banking sector, has led to a decline in Iran’s international transactions.

Speaking in an exclusive interview with Iran Daily, Majidreza Hariri, the head of Iran-China Chamber of Commerce and Industries, added the spread of the virus will definitely have negative impacts on China’s economy and that of the world.

The coronavirus outbreak began in late December in Wuhan, central China, and, eventually, caused the city to be quarantined. The epidemic also led to the cancelation of all large-scale Lunar New Year (started January 25) celebrations in the East Asian country. The world’s second largest economy has, since then, been struggling with the consequences of the epidemic.

“Unless the extent of the spread and epidemic is determined within the coming days, what is said about the consequences of the disease would be more at the level of speculation. However, the epidemic has so far led to a decrease in energy prices and those of raw materials in global markets.” He noted that, nevertheless, each year the level of activities in China’s economy and market falls significantly for two to three weeks at the beginning of the Lunar New Year, adding that since the country is the world’s biggest importer of energy and raw materials, the Lunar New Year holidays, per se, bring down the prices of such items.

“This year, however, the decrease in the prices of commodities, raw materials and energy carriers has been more significant compared to the decline in previous years, which has definitely been due to the spread of the virus and the cancelations the outbreak has led to.” He said, at present, the price of copper has declined to US$5,500 from US$6,200 per ton, adding that each barrel of oil has witnessed a US$10 decrease.

At the beginning of the Lunar New Year in 2019, the prices of raw materials witnessed a close to 4% drop in international markets, compared to their average levels during the rest of the year, Hariri noted, saying this comes as this year’s decrease amounts to 10%, which is almost twice as much as that of last year.

He added that national holidays in China have been extended until February 9, which would further influence market prices. The official stressed that the coronavirus epidemic would further burden the Chinese economy with heavy costs as it has already had negative influences on the domestic market and China’s foreign trade, in addition to the huge expenses the country has borne to contain the outbreak and find a cure.

During the previous Lunar New Year holidays, over two billion trips were made within China, he said, adding the figure was expected to exceed 2.5 billion this year, but the coronavirus spread canceled a large number of them. The epidemic has also shut down China’s production and retail markets as well as tourism and services sectors, he said.

“The SARS outbreak, in 2003, led to a 1% decline in China’s economic growth rate in the same year, while it stood at above 10% at the time.” He put China’s present economic growth rate at between 6.2% and 6.4%, saying if the same pattern that occurred in 2003 repeats itself, the figure will drop to 5.2%, which would be the most unprecedented decrease in the country’s growth rate over the past three decades.

“What is important at present is the extent to which the outbreak would be controlled across the world within the next two weeks, as the virus has already spread to more than 20 countries.”
Commenting on the impact of the coronavirus outbreak on the level of trade transactions and economic cooperation between Iran and China, he said since the national holidays have been extended in China, it is currently impossible to give a precise figure.

“However, given that Iran’s oil exports to China have reached a minimum due to US sanctions, we will not suffer significant losses.”He said that, at present, China accounts for one-fourth of Iran’s foreign trade, adding in 2019, the level of transactions with the East Asian country reached US$23 billion, 36% less than the figure for the preceding year, which was US$33 billion.

Hariri stressed that over the past four decades, the trade balance between the two countries has always been in Iran’s favor, mainly due to oil exports to China. - Iran Daily