Iran's agreement with the P5+1 countries over the former's nuclear programme will result in a removal of almost all sanctions on Iran in Q116.
Declining oil prices will force the government to cut current spending and investment in the country's infrastructure sector in 2016, which will result in slow expansion of private consumption and fixed investment.
Downside pressure on the Iranian rial will remain prominent, and the unit will remain sensitive to developments in nuclear negotiations over the coming quarters.
Major Forecast Changes
We have revised our real GDP growth forecasts this quarter, and are projecting the economy to expand by 1.0% in 2015 and 4.0% in 2016, respectively, from 2.1% and 3.0% previously.
Key Risks To Outlook
A breakdown in the agreement over the country's nuclear programme could prompt us to revise our real GDP growth forecasts downward and our inflation forecasts upward.
|Real GDP growth, % y-o-y||-1.9||-0.5||0.6||2.9|
|Nominal GDP, USDbn||504.7||490.0||396.6||397.7|
|Consumer price inflation, % y-o-y, eop||43.0||16.2||12.0||10.0|
|Exchange rate IRR/USD, eop||24,653.00||27,073.00||33,000.00||37,000.00|
|Budget balance, % of GDP||-1.0||-1.0||-3.0||-2.8|
|Current account balance, % of GDP||5.5||3.6||-0.7||-0.9|
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