The Report: Iran 2017

With a population of nearly 80m, Iran boasts the second-largest economy in the MENA region after Saudi Arabia. Significant growth is expected in the coming years with the country’s new five-year development plan targeting annual real GDP growth of 8%. While perhaps ambitious given the global economic climate, the lifting of sanctions combined with the recent emergence of a reformist and business-oriented political environment has brightened the country’s economic prospects.

The lifting of economic sanctions will undoubtedly provide a near-term boost to the Islamic Republic’s economy, particularly its banking system which should see a significant drop in international transaction costs, while strong capital inflows, including FDI and the repatriation of previously frozen assets will also help drive growth. Iran’s economy is largely characterised by its hydrocarbons sector, with the country home to the second-largest natural gas reserves worldwide and the fourth-largest reserves of crude oil. As such, growth moving forward will be dominated by hydrocarbons exports, with oil production witnessing a significant uptick following the lifting of economic sanctions. However, despite oil prices having rallied in recent months, concerns over volatility remain, largely fuelled by global economic uncertainty and the impact of the Chinese slowdown on neighbouring Asian markets. 

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