Iran Country Risk Report

Published 22 July 2015 | Quarterly

  • 54 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
$1,195.00
Iran Country Risk Report

Core Views

  • Iran will reach an agreement with the P5+1 countries over the former's nuclear programme. This will result in a gradual unwinding of sanctions on Iran.

  • Declining oil prices will force the government to cut current spending and investment in the country's infrastructure sector in 2015, 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 negotiations over the country's nuclear programme could prompt us to revise our real GDP growth forecasts downward and our inflation forecasts upward.

Macroeconomic Forecasts (Iran 2013-2016)
Indicator 2013 2014e 2015f 2016f
National Sources/BMI
Real GDP growth, % y-o-y -1.9 -0.5 0.6 2.9
Nominal GDP, USDbn 504.7 492.0 417.1 434.8
Consumer price inflation, % y-o-y, eop 34.8 23.3 23.0 18.0
Exchange rate IRR/USD, eop 24,653.00 27,073.00 33,000.00 37,000.00
Budget balance, % of GDP -1.0 -2.0 -3.4 -2.5
Current account balance, % of GDP 5.5 3.6 -0.7 -0.8
Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Index
7
Domestic Politics
8
Iran-Russia Relations: Short-Term Boost, Long-Term Divergence
8
TABLE: Political Overview
8
Long-Term Political Outlook
10
Hardliners To Maintain Control, But Power Struggle Likely
10
Chapter 2: Economic Outlook
15
SWOT Analysis
15
BMI Economic Risk Index
15
Economic Activity
16
Slow Recovery As Sanctions Are Eased
16
TABLE: Key Economic Indicators
16
TABLE: Private Consumption
16
TABLE: Government Consumption
17
TABLE: Fixed Investment
17
TABLE: Net Exports
17
Fiscal Policy
18
Further Spending Cuts Coming
18
TABLE: Fiscal Policy
18
Banking Sector
20
Sanctions Relief To Ease Pressure On Banks
20
Exchange Rate Policy
21
Nuclear Deal To Presage Stabilisation, Not Appreciation
21
TABLE: BMI Iran Currency Forecast
21
Islamic Finance
23
UAE To Cement Position As Regional Hub
23
Chapter 3: 10-Year Forecast
25
The Iranian Economy To 2024
25
Range Of Problems To Mitigate Impact Of Nuclear Deal
25
TABLE: Long-Term Macroeconomic Forecasts
25
Chapter 4: Operational Risk
27
SWOT Analysis
27
Operational Risk Index
27
Operational Risk
28
TABLE: Operational Risk
28
Market Size And Utilities
30
TABLE: MENA - Mar ket Size And Utilities Infrastructure
30
International Security Risk
34
TABLE: MENA - Interstate Security Ris ks
34
Chapter 5: Key Sectors
37
Pharmaceuticals & Healthcare
37
TABLE: Pharmaceutical Sales , Historical Data And Forecasts
38
TABLE: Healthcare Expenditure Trends , Historical Data And Forecasts
39
TABLE: Government Healthcare Expenditure Trends , Historical Data And Forecasts
39
TABLE: Private Healthcare Expenditure Trends , Historical Data And Forecasts
39
Telecommunication
41
table : TELECOMS SECTOR - HISTORICAL DATA And FORECASTS
42
Other Key Sectors
45
Table: Oil & Gas Sector Key Indicators
45
Table: Defence & Security Sector Key Indicators
45
Table: Infrastructure Sector Key Indicators
46
Table: Autos Sector Key Indicators
46
Table : Freight Key Indicators
46
Chapter 6: BMI Global Macro Outlook
47
Global Outlook
47
Event Risk Mounting But Manageable
47
Table: Global Assumptions
47
Table : Developed States , Real GDP Growt H, %
48
Table : BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
48
Table : Emerging Mar kets , Real GDP Growth , %
49

The Iran Country Risk Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Iran. It is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Iran's economic, political and financial prospects through end-2019, just published by award-winning forecasters, BMI  Research.

Key Uses

  • Forecast the pace and stability of Iran's economic and industry growth through end-2019.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the operating environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Iran's country risks against regional peers using BMI's country comparative Risk Index system.
  • Evaluate external threats to doing business in Iran, including currency volatility, the commodity price boom and protectionist policies.

The Iran Country Risk Report by BMI  Research includes four major sections: Economic Outlook, Political Outlook, Operational Risk and Key Sector Outlook.

Economic Outlook:

How will the Iran' economic policy-making and performance impact on corporate profitability over 2015-2019?

BMI provides our fully independent 5-year forecasts for Iran through end-2019 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Iran Country Risk Report features BMI's forecasts with supporting analysis for 2015 through to end-2019, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Index system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector obligations).
  • Global Assumptions - forecasts for each year to end-2019 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Iran and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Iran, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Iran over the next 5-years?

BMI's Iran country Risk Index evaluates the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Iran Market - Political Strengths, Weaknesses, Opportunities and Threats facing Iran.
  • Political Stability and Risk Assessment - BMI's Risk Index assesses explicit short- and long-term risks to political stability; latest positioning and trends for Iran's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.
  • Long-Term Political Outlook BMI examines the structural risks to the stability of Iran’s political system and the dominant public policy issues likely to affect decision-makers, and outlines scenarios for how the state could evolve in the medium to long term.

Key Benefits

  • Benchmark Iran's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Operational Risk

What are the current operational risks and difficulties associated with doing business in Iran?

The Operational Risk section gives an evaluation of current risks and difficulties associated with operating in the market. It also provides a brief overview of the regional Operational Risk Index which benchmarks Iran against its neighbours.

Operational Risk Contents

The chapter provides a summary of the main threats in the country, within:

  • Labour Market Risk (Education; Availability of Labour; and Labour Costs)
  • Logistics Risk (Market Size and Utilities; Quality and Extent of the Transport Governance)
  • Trade and Investment Risk (Economic Openness; Government Intervention; and Legal Risks)
  • Crime and Security Risk (Crime; Terrorism; and Interstate Conflict risks).

The report also drills down in greater depth to address key issues in one of the following segments most critical to the market:

  • Transport network, economic openness, cost and availability of labour, crime risks, bureaucratic environment, market size and utilities, and interstate conflict.
  • Assess your company’s exposure to country specific operational and business risks, using BMI’s insight on the current dangers of operating in the market.
  • Evaluate Iran’s risk profile against its regional peers, helping you understand the market’s strengths and weaknesses in relation to other countries.

Key Sector Outlook*

Which industry sectors in Iran will grow fastest, and where are the major investment opportunities in the market?

BMI identifies investment opportunities in Iran's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry, including recent sector developments and major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2015-2019, using BMI's proprietary industry modelling technique, which incorporates key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across and within each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

*Not all Country Reports contain the Key Sector Outlook chapter. Please enquire above for more information.

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