What Will Nuke Deal Mean for Iranian Economy?

Last week saw an accord reached between the P5+1 and Iran regarding the latter’s nuclear programs. Part of the agreement included lessening sanctions imposed against the nation that have seriously impaired its economy. Analysts believe this could lead to a serious turnaround of the Iranian economy, but how much growth will this really mean for the embattled Middle Eastern nation?

Years of Crippling Sanctions

Last week saw an accord reached between the P5+1 and Iran regarding the latter’s nuclear programs. Part of the agreement included lessening sanctions imposed against the nation that have seriously impaired its economy. Analysts believe this could lead to a serious turnaround of the Iranian economy, but how much growth will this really mean for the embattled Middle Eastern nation?

Years of Crippling Sanctions

International sanctions have crippled Iran’s economy for years. Thus, any reduction of these sanctions would almost undoubtedly improve the current, bleak outlook for Iran. The government’s urging that its people build a “resistance economy” never really took hold, and the people of Iran remain deeply integrated into the world economy. The conservative Islamic country’s large middle class is hoping the nuclear deal will boost their access to global trade resources.

Small Improvements Already Visible

According to a report by The National, Iran has experienced modest growth of about 3 percent in the past year and a half thanks, in large part, to the partial lifting of sanctions in November 2013. Lifting the sanctions was pursuant to an interim agreement called the Joint Plan of Action, by which Iran agreed to roll back parts of its nuclear program in exchange for relief from some sanctions. This led to four consecutive quarters of growth.

One of the biggest areas of recovery has been Iran’s auto industry. In 2010, before sanctions tightened after contentions with the West, Iran produced more than 1.5 million autos a year, making it the 12th largest auto-producing nation in the world. Licenses from foreign manufacturers allow for production in Iran. When sanctions tightened, the auto industry contracted. Thanks to the Joint Plan of Action, the auto industry obtained specific exemptions. Thus, by last spring, auto production was up by 90 percent.

Internal Political Discord Remains

Of course, international sanctions are not to blame for all of Iran’s financial woes. Iran also suffers from deep political divides, both in its government and among its people, regarding how to handle the nation’s economy. This has led to a tangled regulatory system that combines overly regulated sections, some unregulated, and others that suffer from ineffectual laws. While for the moment Iran’s leaders seem united behind the deal regarding Iran’s nuclear ambition, further divides are already developing between religious hardliners and more liberal members of the government. This leaves the future of Iran’s economic development as uncertain as ever.