Economy, Domestic Economy

Iran’s Economy Poised for Growth Despite Sanctions

Iran’s Economy Poised for Growth Despite Sanctions Iran’s Economy Poised for Growth Despite Sanctions

Many predict that Iran’s economy is poised for a significant growth no matter what the outcome of the ongoing nuclear negotiations between the country and the P5+1 group (the five permanent members of the UN Security Council plus Germany), wrote the Washington Times.

With the Middle East’s second-largest consumer market after Egypt, a young and Internet-savvy population, a vast oil and gas resource base and a critical location, Iran is finding partners lining up to strike deals and investments despite the western sanctions.

“The Iranian economy will grow even without a deal. It’s not going to depend on the lifting of sanctions. It will just grow and develop at a slower pace,” said Bijan Khajehpour, a managing partner for the Austria-based consulting firm Atieh International.

He made the prediction at a recent roundtable discussion about Iran’s economic prospects at the Washington-based Woodrow Wilson International Center for Scholars.

Officials from China, Russia, France, Britain, the US and Germany gathered with an Iranian delegation in Vienna this month for a sixth round of talks ahead of a June 30 deadline to reach an agreement over Iran’s nuclear program, which would lead to the lifting of sanctions.

“Iran’s gas production and oil export revenues will rise and inflation and unemployment will be sharply reduced over the next few years whether or not a deal is reached,” Khajehpour said.

Analysts also say that the lifting of sanctions would provide a major stimulus for Iran’s economy. A deal would accelerate economic development and private job growth that could lead to increases in gross domestic product of about 7 percent a year by 2018. It also could unfreeze $120 billion in assets that would “be at the disposal of the Iranian central banks and the government,” Khajehpour said.

He predicted that a deal with sanctions relief would enable Iran to produce 400,000 barrels of oil per day, a return to mid-2012 levels, by early 2017.

The sanctions had a negative effect on Iran’s economy, which was worsened by a slide in global oil prices.

After growing by nearly 4 percent in 2011, Iran’s GDP contracted by 6.6 percent in 2012 and another 1.9 percent in 2013, according to the World Bank. Under President Hassan Rouhani, the economy grew by about 3 percent in 2014.

Western business groups have lately been reaching out to Iranian partners in anticipation of the day the walls of sanctions come down. IRNA reported last week that US and European venture capitalists are scouting Iranian startups for potential investments in the months ahead.

“We started getting a lot of interest from foreigners” in the days right after an interim agreement between the US, its allies and Iran was announced in early April, Fatemeh Amir Soleimani, an Iranian entrepreneur who runs an e-commerce site for baby products called Koodakoo, told the wire service.

 “When I say ‘a lot,’ it was really a lot,” she said.

Meanwhile, Khajehpour estimated that only about 20 percent of Iran’s economic problems were related directly to the sanctions. Although a deal suspending the sanctions would undeniably benefit Iran’s economy, he suggested that the government would be better off focusing on investing in infrastructure and energy-efficient programs, among others.