|
|
Iran Business Forecast Report Q1 2010Published by: Business Monitor International Published: Oct. 30, 2009 - 58 Pages Table of Contents
AbstractThe outlook for the economy over the next five years is subdued. Private consumption growth, drivenby a steadily rising population, will lift real GDP growth to the 3-4% range. However, internationalsanctions stemming from Iran’s nuclear programme will continue to preclude any significant uptickin foreign investment. Indeed, this issue continues to overshadow all others.At the end of September, it came to light that Iran has been covertly constructing a second uraniumenrichment facility near Qom. This has further fuelled suspicions in the West that the IslamicRepublic’s nuclear programme has a military dimension, and for a time it appeared that furthersanctions could be enacted. Diplomatic progress in October has averted this threat for now, thoughif this progress stalls, the push for harsher measures could gather pace once again. Domestically, the government managed quickly to quell the mass demonstrations that grippedTehran and other major cities in the wake of June 2009’s disputed presidential elections. It nowrisks unleashing a fresh wave of protests. Tehran’s dire fiscal position has forced it to attempt topush through legislation that would rationalise energy and food subsidies. This would be likely toraise the cost of living for ordinary Iranians. However, if the government did implement the subsidycuts, fuel consumption could fall, making Iran less susceptible to the threat of sanctions on gasolineimports. After passing through the bottom of the economic cycle in FY2009/10, real GDP growth shouldpick up in FY2010/11. However, the recovery will be weak. We see the economy expanding by anannual average of 3.5% over the course of our five-year forecast period. Base effects and a weakereconomy meant consumer price inflation looked set to fall into the single digits in late 2009, but weexpect it to return to double digits fairly quickly, and remain there throughout the five-year forecastperiod. That said, a return to the rates of nearly 30% y-o-y witnessed in late 2008 is unlikely. Anexpected period of relatively low oil prices will lead to lower current account surpluses over thecoming years. If capital flight increases, this could spell trouble for the rial. The business environment continues to be adversely affected by international sanctions. In thelatest measures to be enacted, the UK froze financial ties with Bank Mellat and Iran’s nationalshipping carrier in October. FDI inflows remain pitifully low (just US$1.49bn in 2008), althoughinward investment from Asia is going some way towards filling the gap left by Western firms. Indeed,state-owned Chinese companies have recently signed major oil and gas deals with Tehran. Theprivatisation process could speed up as the government looks to finance large future fiscal deficits;but, given the poor investment climate, private investors will continue to be deterred. Get Full Details About This Report >> |
|
|||
|
About MarketResearch.com
|
||||