Iranian ladies looking in a shop window © Press Association Images
Iranian ladies looking in a shop window © Press Association Images

Country spotlight: Iran

19 February 2016

Population
77.4m (60% under 30)

Area
1,629,807km2

The helicopter view
President Hashan Rouhani says $30-50bn of foreign investment will grow GDP of $406bn by 8% a year. It may need more. Iran is the world’s 17th largest economy, but agriculture, oil, finance, aviation and technology all need modernising.

Economic outlook
Good. If Iran produces 3.6-4.2m barrels of oil a day – and sanctions stay lifted – the World Bank forecasts the economy will grow by 5.8-6.7% in 2016. Reforms to reduce government influence, rationalise the licensing of businesses and spur competition could accelerate that.

Biggest foreign investors
Italian steel maker Danieli and French automotive parts maker Faurecia are set to manufacture in Iran. Peugeot has paid £344m to revive its alliance with leading car maker Iran Khodro.

Supply chain issue
Foreign companies need to ensure that human rights are protected in any business they launch in Iran – and in any Iranian business in their supply chain.

Strengths
It’s the fourth largest producer of oil, the second largest of natural gas, and rich in zinc, silver, copper and iron. Its highly educated population may help it grow in technology, healthcare and pharmaceuticals.

Challenges
Dealings with the Revolutionary Guard are still off limits but it is influential in the energy sector – the firms it controls have annual sales of $10bn. Sanctions may be reimposed if Iran flaunts the nuclear deal.

Bottom line
Spiritual leader Ali Khamenei wants Iran to lead the regional economy with little exposure to Western commerce. Rouhani favours a Chinese model where the booming economy becomes a global force without democratisation. Investing in this country is risky but could prove lucrative.

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