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Iran Defence and Security Report 2015

BMI Industry View
SWOT
Political
Economic
Operational Risk
Industry Forecast
Defence Expenditure
Table: Defence Expenditure (Iran 2012-2019)
Armed Forces
Table: Armed Forces Personnel (Iran 2005-2012)
Table: Manpower Available For Military Service (Iran 2012-2019)
Exports
Imports
Macroeconomic Forecasts
Economic Analysis
Table: Economic Activity (Iran 2010-2019)
Table: GDP By Expenditure (Iran 2012-2019)
Industry Risk Reward Index
Iran Defence Risk Reward Index
Table: Middle East And North Africa - Defence Industry Risk Reward Index
Rewards
Risks
Market Overview
Iran Security Overview
Domestic Threats
Regional Threats
International Threats
Weapons Of Mass Destruction
Iran Defence Market Overview
Domestic Defence Sector
Domestic Defence Market
International Partnerships and Defence Agreements
Table: Iran - Bilateral Defence Agreements
Company Profile
China Great Wall Industry Corporation
Sukhoi
Ulan-Ude Aviation Plant
Aerospace Industries Organization
Ammunition & Metallurgy Industries Group
Defence Industries Organization
Iran Electronics Industries
Regional Overview
Middle East And North Africa Security Overview
Challenges And Threats To Stability And Security
Regional Power Dynamics
Nuclear Proliferation
External Powers
Global Industry Overview
Political Risk Analysis
Methodology
Industry Forecast Methodology
Sector-Specific Methodology
Sources
Security Risk Index Methodology
Table: Indicators And Weighting

Iran Defence and Security Report 2015

BMI View: We expect Iran to reach a nuclear deal with the P5+1 powers in 2015, leading to a lifting ofsanctions over coming quarters. This will facilitate a return to economic growth; however, progress willslow, and Tehran's military spending will therefore remain modest on a regional comparison in the shortterm.

That said, demand for defence equipment will be strong, as Iran continues to provide assistance toShi'a groups across the region; seeks to narrow the gap to rival Saudi Arabia's more technologicallyadvanced military; and invests in weapons systems to protect against a potential US/Israeli attack.

Meanwhile, the government remains committed to achieving its goal of military self-sufficiency. Iran has alarge number of domestic defence companies, capable of manufacturing products such as small arms, tanks,missiles and military electronics. The lifting of sanctions will eventually enable sector exports, creatingtrade opportunities for local manufacturers, and allowing these to partner with foreign firms to benefit fromtechnology transfer.

In 2015 we expect Iran to reach a deal with the P5+1 powers over its nuclear programme. This will lead to agradual lifting of sanctions, which in turn will bring the Iranian economy back to growth. That said,recovery will take time, as the country struggles to overcome logistical and bureaucratic issues associatedwith years of underinvestment and as the key oil sector is not expected to be able to spur a significant uptickin exports until 2016 at the very earliest. In 2015, therefore, we expect Iran's defence spending to remainmodest on a regional comparison, reaching USD9.8bn. This represents a 21.1% year-on-year (y-o-y)increase, which may seem significant; however, it can be explained by a rise in IRR value when markedagainst USD. Demand for military equipment in Iran will continue to be driven by the real or perceivedthreat of a US/Israeli attack on its nuclear facilities; the maintenance of a large ground force to make up fora lack of advanced military equipment; the continued assistance provided to Shi'a militants operating acrossthe Middle East as well as efforts to maintain social and political stability at home.


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