Iran will soon be open for business. That means more oil going out, but also everything from airplanes to cars going in, with Asian manufacturers set to be among the biggest winners.
“It’s a fantastic opportunity for Asian automakers,” said Anna-Marie Baisden, London-based head of auto analysis at BMI Research of the imminent end to the trade restrictions. “There’s quite an appetite for foreign brands with good quality,” she was quoted by Bloomberg as saying.
And it’s not just the likes of Toyota and Hyundai that will benefit. The Korean International Trade Association reckons Iran’s construction market will expand to $154.4 billion in 2016 from $88.7 billion in 2013. South Korea is set to boost sales of steel products, petrochemicals and machinery as the Islamic Republic rebuilds its infrastructure, according to the association. It also expects exports of auto parts, mobile phones, refrigerators and other home appliances to increase.
Iran’s biggest trading partner last year was China, which stood aloof from sanctions to purchase the country’s oil, followed by the United Arab Emirates, whose proximity to the Islamic Republic allowed easy access to Iranians wanting to buy foreign goods. Three of the next four biggest -- India, South Korea and Japan – are located in Asia.
The oil and gas rich country’s growth will accelerate to 5.2 percent per annum in 2016-19 from just 2 percent this year, the Economist Intelligence Unit estimates. Iran, currently the world’s 29th biggest economy based on market exchange rates, will jump to 22nd by 2020, eclipsing the likes of Switzerland, Argentina, Taiwan, Sweden and Thailand, according to the EIU.
The attraction of “a large, diversified and fairly sophisticated economy” as the EIU describes it, is undeniable.
“People will certainly have the money to spend as soon as the sanctions are lifted and the economy starts picking up again,” said Baisden.
