BMI View: An agreement was reached between Iran and the P5+1 powers in Vienna in July which should see all sanctions against the Middle Eastern country removed in 2016. This is highly positive news for the freight transport sector in Iran, in particular the shipping sector and the country's pipelines, as it will resume oil exports in full. With regards the rest of the freight transport mix, growth will be slow initially as the economy will take some time to recover. Nevertheless, growth will accelerate over the course of our medium-term forecast period to 2019, across all freight modes.
We forecast total road freight volumes will rise by 0.8% in 2015 to reach 109mn tonnes. Growth will be 2.8% in 2016.
We forecast total rail freight volumes will rise by 0.3% in 2015 to reach 33.03mn tonnes. Growth will be 1.5% in 2016.
We forecast total air freight volumes will rise by 0.3% in 2015 to reach 98,740 tonnes. Growth will be 1.2% in 2016.
We forecast total nominal trade value to rise by 7.5% to reach USD251bn in 2015. Growth will be 7.6% in 2016.
The top trade partners will be the UAE, China, India, South Korea and Turkey.
Trade in Iran will pick up slowly over the coming years, in line with an improving economy and the removal of sanctions. That said, the recovery will not be immediate, and real total trade will undergo another year of decline in 2015, only returning to positive territory in 2016. We expect Iran's economy to emerge from recession once the lifting of sanctions begins - yet we warn that significant impediments to growth remain, and the Vienna agreement does not presage a boom.
Our forecasts already factored in the impact of sanctions relief, but see the Iranian economy growing by only 0.6% in real terms this year - although this will pick up to 2.9% by 2016. Consumer and business confidence will be strengthened over the coming months, and we expect a temporary appreciation of the Iranian rial as well as steady gains in the Tehran stock market. The easing of financial sanctions will facilitate project finance and attract greater foreign investment, notably in consumer sectors (such as autos, food and drink, and telecoms) and infrastructure. A large and well educated population, high per capita income, and a considerable infrastructure deficit provide significant attractions for foreign investors. Those that already had a presence in Iran prior to the sanctions and have successfully maintained ties with the country in recent years will be the main beneficiaries.
Growth in road freight volumes will be positive in 2015, having contracted the two previous years, although expansion will be far from robust. Growth will strengthen in 2016 and beyond as the Iranian economy rebounds on the removal of Western sanctions, although we do not predict a boom. We forecast that in 2015, Iran's road haulage volumes will enjoy positive growth for the first time since 2012, predicting a 0.8% expansion in volumes.
Although the recovery in Iranian rail freight volumes will be slow, we expect that the deal agreed between Iran and the P5+1 powers in Vienna in July will presage the way for a steady pick-up in growth over the course of our medium-term forecast period. We see scope for the mining sector in particular to drive growth as the country begins to tap its massive reserves. In 2015, BMI forecasts that Iranian rail freight will see growth of 0.3%, taking the total tonnage transported by rail to 33.03mn tonnes. Rail freight tonnes-km will see growth of 0.1%.
According to our projections, volumes of Iranian air freight will return to growth in 2015, following three years of declines. Growth will remain sedate this year as the macroeconomic challenges facing Iran remain severe in the short term, but we expect that growth will accelerate in 2016 and over the remainder of our forecast period to 2019 as the economy improves. We forecast that air freight will begin a slow recovery in 2015, predicting that the transport mode will record 0.3% growth in volumes over the course of the year.