Against the background of geopolitical processes observed in the world and the new economic situation formed in the region, trade relations with Iran have once again come into focus. In particular, issues related to changes in the prices of products imported from Iran to Azerbaijan, product supply in the domestic market, and price forecasts for the near future remain relevant.
Speaking to Modern.az on the topic, Akif Nasirli, chairman of the Center of Liberal Economists, noted regarding the possible impact of changes that may arise in trade relations on the domestic market and consumer prices that trade at the Iran-Azerbaijan border currently continues in a normal regime and relative calm has been established in recent weeks.
"But this calm did not directly affect prices as a 'decrease'. On the contrary, there is a slight increase in some products, and a seasonal decrease in others.
Agricultural products, construction materials, chemicals, polyethylene granules, detergents, confectionery, fruits and vegetables, dates, potatoes, onions, greens, cement, tiles and ceramics mainly come from Iran to Azerbaijan. In the last 2-3 months, the rial has sharply depreciated. Inflation within Iran is above 40 percent. This lowers export prices in dollars. As a result, a decrease of 5-12 percent is observed in Iranian-origin dates, apples, tomatoes, cucumbers, watermelons, dried fruits, washing powder, and plastic products in the Azerbaijani market. In particular, Iranian potatoes and onions are sold 20-30 qepiks cheaper than local products in the "8th kilometer" and wholesale markets. The reason is the surplus product in Iran and the depreciation of the rial."
According to the economist, however, logistics and payment risk raise the price again:
"Iranian banks are under sanctions, money transfers have become difficult. When trucks are subjected to additional checks at customs in Astara and Bilasuvar, they are delayed by 3-5 days. This cost is also added to the goods. Therefore, even if the rial depreciates, the final price on the shelf does not drop sharply. There are three main risks in trade with Iran. First, if geopolitical tensions rise again, the border may be closed or restrictions may be imposed. Then Iranian goods will leave the market and the price of local products will immediately rise. Especially in winter months, there will be a shortage of tomatoes, cucumbers, greens, and potatoes, because our greenhouse volume does not fully meet the demand. Second, currency risk. If the rial strengthens again tomorrow or Iran imposes an export ban, import prices will automatically increase. Third, payment channels. Since SWIFT does not work, cash dollars are used. Carrying cash is risky and expensive."
A.Nasirli also emphasized that the most significant price decrease is currently felt in fruits and vegetables and detergents:
"If Iranian dates were 4-5 manats last year, now they are 2.80-3.20 manats. Iranian watermelons and melons come 30-40 percent cheaper than local products in season. Polyethylene products, disposable containers, shampoo, and soap have also decreased by about 10 percent. But there is no decrease in construction goods such as cement, tiles, and rebar, because transportation costs and customs duties have increased.
The forecast for the next 3-4 months is as follows. If there is no military escalation around the Strait of Hormuz and the border remains open, the prices of Iranian goods will remain at the current level. In autumn, when local products decrease, Iranian potatoes, onions, and tomatoes will rebalance the market and prevent a sharp price increase. But it is difficult to expect complete stability. Within Iran, gasoline and bread prices are rising, and when exporters cannot get subsidies from the state, they are forced to sell goods at higher prices."
The economist believes that price stability is a conditional concept:
"If global oil, grain, and logistics prices rise, Iranian goods will also become more expensive. In addition, the exchange rate of the manat and customs policy also play a role. Risks remain: border closure, tightening of sanctions, sharp strengthening of the rial. If one of these three happens, Iranian goods will either leave the market or become 15-25 percent more expensive.
In short, there is now a relative cheapness in the fruit and vegetable and household chemicals segments due to Iranian products. But this depends on geopolitics. If the situation changes tomorrow, we will see the first blow in consumer prices. Therefore, local greenhouses and processing should be strengthened to reduce dependence on imports," he concluded.
