Iranian Economy Will Grow in 2015

According to the deputy governor of Iran’s central bank, the economy could grow up to four percent, according to Reuters. Iranian leadership reached an agreement with the international community over the state’s nuclear ambitions. The deal will also lead to a revival of the nation’s fledgling oil and gas industry.

According to the deputy governor of Iran’s central bank, the economy could grow up to four percent, according to Reuters. Iranian leadership reached an agreement with the international community over the state’s nuclear ambitions. The deal will also lead to a revival of the nation’s fledgling oil and gas industry.

Iran’s relationship with the United States remains contentious, but Supreme Leader Khamenei wanted a deal in order to improve his country’s dire economic state. Things are beginning to swing in Iran’s favor, as many foreign companies weigh the benefits of investing in the Shiite nation. For instance, Germany’s economy minister and vice chancellor have expressed interest in fostering greater economic ties with Iran, including French and Italian authorities.

French companies have been in Iran for some time, but business has suffered due to western sanctions. France needs more demand markets to improve export potential, and Iran will benefit from an influx of goods from around the world. In return, an opening of Iranian markets will provide some relief to struggling economies that need the export revenue.

More importantly, Iran stands to benefit from emerging markets, including Asian countries that have excess capital to spend. Companies from South Korea, Malaysia, Japan, India and China all had investment plans in the works with Iran before the sanctions fallout, and various projects and deals may be back on the table. Iran will gain headway in such sectors as construction, engineering and energy.

The Iranians seem welcoming to foreign investment, especially in regards to the oil and gas sector. Oil minister Bijan Zanganeh stated that Iran plans to develop oil and gas reserves using domestic and foreign manpower. Production fell below three million barrels a day since 2012 and oil exports plummeted from 2.5 million bpd to 1.3 million bpd in 2011. According to Industry Minister Mohammad Reza Nematzadeh, the energy field needs five years to fully revive capacity seen from five years ago.

Iran is set to join mainstream markets, but certain areas of the government need to be improved. For instance, foreign companies still have to overcome Iran’s notorious regulatory and bureaucratic hurdles. Analysts also note shortcomings in the legal system and labor laws as potential liabilities.

Further, the domestic environment is not exactly welcoming to outsiders, but the hostile atmosphere has more to do with Iran’s inexperience in dealing with foreign investors. If Iran is going to be successful, the government will have to make meaningful changes, in addition to embarking on a massive public relations campaign that depicts the country as open and friendly to outside business. Iran plans to attract foreign partners for $185 billion by 2020.