Iran Country Risk Report

Published 28 January 2015 | Quarterly

  • 62 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

  • Recent improvements in relations with the West bode well for the country's economy. That said, uncertainty over the outcome of negotiations over Iran's nuclear programme will ensure that risks to the outlook remain elevated.

  • 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 1.4% in 2015 and 2.2% 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
Nominal GDP, USDbn 504.7 496.3 503.2 514.9
Real GDP growth, % y-o-y -1.9 1.7 1.4 2.2
Consumer price inflation, % y-o-y, eop 19.7 23.0 22.0 18.0
Exchange rate IRR/USD, eop 24,653.00 25,800.00 29,500.00 31,500.00
Budget balance, % of GDP -1.0 -0.4 -2.9 -2.5
Current account balance, % of GDP 5.5 5.2 -1.9 -1.8
e/f = BMI estimate/forecast. Source: UN, National Sources, BMI

Click here to explore data

Table of Contents

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
Foreign Policy
8
Nuclear Talks: Breakthrough Unlikely Following Extension
8
A 'permanent' agreement on Iran's nuclear programme will remain elusive following the recent extension of a deadline for a final deal to
A 'permanent' agreement on Iran's nuclear programme will remain elusive following the recent extension of a deadline for a final deal to
June 30, 2015
Investment by Western companies in Iran will remain low over the coming years as operational environment risks stay
elevated
Table : Political Over view
8
Table : Possible Sce nari os Over The Ne xt Two Years
9
Long-Term Political Outlook
10
Incomplete Regime Transformation By 2020s
10
We expect partial 'regime transformation' in Iran by the 2020s, as the ruling elite seeks to pre-empt the possibility of mass unrest
Relations with the West will improve only modestly, and r isks of reaching a final agreement on the nuclear programme are tilted slightly
Relations with the West will improve only modestly, and r isks of reaching a final agreement on the nuclear programme are tilted slightly
to the downside
Chapter 2: Economic Outlook
15
SWOT Analysis
15
BMI Economic Risk Index
15
Economic Activity
16
2015 And 2016 Growth Forecasts Revised Downward
16
Real GDP growth in Iran will slow in 2015
Lower oil prices will force the government to cut spending, and a failure to reach a
breakthrough in nuclear talks will ensure that foreign investment remains low
We have revised downward our real GDP growth forecast
for the Iranian economy at 1
Table : Economic Activity
16
Monetary Policy
18
Increasing Inflation Posing Downside Risks To Nuclear Talks
18
Inflation in Iran will increase in 2015 as the government cuts energy and food subsid ies in a bid to reduce a widening fiscal deficit,
Inflation in Iran will increase in 2015 as the government cuts energy and food subsid ies in a bid to reduce a widening fiscal deficit,
a result of lower oil prices
We project CPI
inflation to average 21
Table : Monetary Policy
18
Balance Of Payments
19
Current Account In Deficit From 2015
19
Iran's current account will come in at a deficit of 1
9% of GDP in FY2015/16 - the first deficit since FY1998/99 - and remain in the red
for the rest of the decade, primarily on the back of weaker oil prices
International sanctions will continue to hinder Western investment,
while FDI from Asia and the Middle East will expand only gradually
Table: Curent Account
19
Banking Sector
21
Slower Growth In 2015
21
High base effects will lead to slower growth in Iran's commercial banking sector in FY2015/16 compared to this fiscal year, while risks to
High base effects will lead to slower growth in Iran's commercial banking sector in FY2015/16 compared to this fiscal year, while risks to
fundamental stability will remain contained
Profitability will be minimal due to the elevated non-performing loan ratio, the dominance of
highly leveraged state-owned banks and a lack of access to global financial markets as sanctions on the sector remain for the coming
highly leveraged state-owned banks and a lack of access to global financial markets as sanctions on the sector remain for the coming
two years
Exchange Rate Policy
22
IRR: Pronounced Weakness In 2015 And 2016
22
The Iranian rial will weaken over the coming years in both regulated and street transactions, on the back of lower oil prices and a failure
The Iranian rial will weaken over the coming years in both regulated and street transactions, on the back of lower oil prices and a failure
to reach a breakthrough in nuclear talks
We project the unit to average IRR30,0 00/USD in 2015 and IRR 34,0 00/USD in 2016 in the
official market, from IRR25,800/USD in 2014
Table: Exchange Rate
22
Table : Curency Forecast
23
Chapter 3: 10 -Year Forecast
25
The Iranian Economy To 2024
25
Sanctions To Cloud Economic Outlook
25
The inability to fully exploit Iran's enormous oil and gas wealth and a challenging operational environment will lead to slow economic
The inability to fully exploit Iran's enormous oil and gas wealth and a challenging operational environment will lead to slow economic
growth over the next 10 years
A 'permanent' nuclear deal with the West will be elusive, contributing to significant challenges for foreign
firms willing to enter the market
Table: Long-Term Macroeconomic Forecasts
25
Chapter 4: Operational Risk
29
SWOT Analysis
29
Operational Risk Index
29
Operational Risk
30
Table: Operational Risk
30
Availability of Labour
32
Table : MENA - Availability Of Lab our Ris k
32
Table : Top Seven Source Countries For Migra nt Workers (-000)
35
Table : Lab our Force Empl oyment By Sect or (-000)
36
Crime Risk
37
Table : MENA - Crime Risks
38
Chapter 5: Key Sectors
41
Autos
41
Table : Aut os Total Mar ket - Historical Data And Forecasts
43
Table : Pase nger Car Market - Hist orical Data And Forecasts
43
Table : Commercial Ve hicle Market - Historical Data And Forecasts (Iran 2012-2018)
43
Agribusiness
47
Table: Corn Production & Consumption
48
Table : Barley Producti on & Consumption
48
Table : Wheat Producti on & Consumption
49
Table: Milk Production & Consumption
50
Table: Beef Production & Consumption
52
Table : Poultry Production & Consumption
52
Other Key Sectors
55
Table : Oil and Gas Sect or Key Indicators
55
Table : Pharma Sector Key Indicators
55
table : Infrastructure Sector Key Indicators
55
Table : Telecoms Sect or Key Indicators
56
Table : Defence and Security Sector Key Indicators
56
Table : Freight Key Indicators
56
Chapter 6: BMI Global Assumptions
57
Global Outlook
57
New Era For Oil
57
Table: Global Assumptions
57
Table : Devel oped States , Real GDP GrowtH , %
58
Table : BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
58
Table : Emerging Markets , Real GDP Growt h, %
59

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, Business Monitor International (BMI).

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 Business Monitor International (BMI) 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.

secure
Benefit from discounts when you add multiple products to your basket
2 Products SAVE 10%
3 Products SAVE 15%
4 Products SAVE 20%
5 Products SAVE 25%
6 Products SAVE 30%
7 - 20 Products SAVE 35%
21 Products or more SAVE 40%

Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express