Iran expects opportunities from expansion of trade ties with Saudi Arabia
Mehdi Karimi Tafreshi
Member of the managing board of Iran’s Association of Food Manufacturers
Saudi Arabia has an annual trade worth $300 billion and experts believe Iran’s trade with the country can reach up to $3 billion with the Arab country within the next few years and following a deal to resume their diplomatic ties between the two countries.
That could create major economic opportunities for Iran.
Saudi Arabia is a key member of the (Persian) Gulf Cooperation Council and a major importer of agricultural and food products in the West Asia region mainly because of its arid weather conditions.
The Saudi government began introducing policies to boost the level of technology in its agriculture sector since 1970s with the aim of expanding its irrigation and water storage systems.
However, the country has always faced shortages in wheat and other grain supplies, forcing it to use the vast capacity existing in its ports system to import products from countries like Russia and Ukraine and to re-export them to other countries.
Saudi Arabia is on a rapid path toward industrialization and has experienced a good deal of economic growth over the past decade. Figures show its gross domestic products (GDP) rose by 12.2% in the year to June 2022, one of the best in the region and in the world.
The country is one of the main economic rivals of Iran in the region and is making efforts to become a major market in Iran’s neighborhood in the near future.
That is why Iran should have a better understanding of Saudi Arabia’s economic strategies, including its 2030 vision plan which was announced in 2016.
A main foundation of Saudi Arabia’s economic policy-making is to distance the country from oil revenues and to allow the private sector to play a greater role in the country’s economy. The country is also seeking to increase the share of foreign investment in its economy.
Iran has a good potential in exports of petrochemicals, pharmaceuticals minerals and metals which can create a good opportunity for economic cooperation with Saudi Arabia. Iran can also respond to Saudi Arabia’s demand for technical and engineering expertise and help the country with its efforts to boost the share of technology in its economic sectors.
Saudi Arabia’s arid weather conditions also creates a good opportunity for Iran to supply the services needed in the country’s agriculture sector while allowing Iranian exporters to increase their presence in the country’s food and agriculture market.
Better economic relations with Saudi Arabia can also facilitate Iran’s access to banking services and help boost trade ties with other countries in the region.