Iran has the world's fourth largest proven oil reserves, and the world's second largest proven gas reserves after Russia. Iran is also rich in other resources aside from oil and gas, and has a strong agricultural sector. The country’s Revolutionary Guard and Basij militia are fiercely loyal to the supreme leader, helping to maintain social stability.

We keep our clients informed of the latest market moves and political developments as part of our 'top-down' and 'bottom-up' perspective. Clients also benefit from in-depth analysis on 18 of Iran’s most important industries. We provide interactive data and forecasting alongside detailed and risk-assessed analysis from our expert teams. We aim to keep you ahead of the curve, so you can do business with ease in Iran.

Country Risk

Iran Country Risk

BMI View:

Core Views

  • Iran will be one of the fastest growing economies in the region over the next five years as investment comes into the country following the removal of sanctions.

  • Declining oil prices will force the government to cut current spending and investment in the country's infrastructure sector in 2016, 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.

Key Risks To Outlook

  • A breakdown in the agreement over the country's nuclear programme could prompt us to revise our real GDP growth forecasts downward and our inflation forecasts upward.

    ...

Iran Operational Risk Coverage (9)

Iran Operational Risk

BMI View:

BMI View: Iran's labour market potential will remain largely untapped by businesses over the medium term due to inflexible labour regulations which are unlikely to be reformed. The labour market ostensibly offers considerable appeal to incoming firms, due to a large and well-educated youth population which is eager for employment. Nevertheless, rigid labour laws continue to pose difficulties to hiring and firing practices by protecting older workers in long-term employment and exacerbating the related issues of high youth unemployment and talent flight. Labour costs are...

Iran Crime & Security

BMI View:

Iran's continuing pursuit of a nuclear programme in spite of international condemnation and sanctions has made it one of the most ostracised states in the world. The country experiences largely unfriendly relations with most other nations, and its vulnerability has increased since June 2014 with the rising threat of the Islamic State of Iraq and the Levant (ISIS) in neighbouring Iraq and Syria. Iran's overall score is highly depressed by these interstate security risks. However, due to its strong policing capabilities and relatively low levels of organised crime across the country, the risk of criminal activity affecting foreign workers and businesses remains low. Iran has therefore been awarded an overall score of 41.7 out of 100 in the BMI Crime and Security Risk Index. This score is the highest of Iran's neighbouring nations, and places the country in joint eighth position out of 18 Middle East and Africa (MENA) states, along with its...

Iran Labour Market

BMI View:

The major impediment to the fulfilment of Iran's labour potential is the poor state of the Iranian economy through international sanctions. Not only does this represent a dearth of opportunities for skilled and educated workers, but also a lack of employment opportunities for the many unskilled labourers in Iran. Iran scores 47.3 out of 100 for its Labour Market Risks, placing it in ninth position out of 18 countries in the Middle East and North Africa (MENA) region.

In terms of the size of Iran's labour force, the country has a burgeoning youthful population. While this is often a boon in developed economies, in Iran it is placing unprecedented stress upon the job markets as there are too few opportunities being vacated by elder members of the workforce to provide employment for the many young members entering Iran's labour force. These young workers also often have a higher level of literacy and education than their older compatriots due to...

Iran Logistics

BMI View:

Iran is a logistics underperformer within the Middle East and North Africa (MENA) region. All aspects of the country's economy and trade have suffered due to international sanctions. Furthermore, high levels of bureaucracy provide an additional barrier to trading from the country, and the utilities infrastructure is struggling to meet demand. Iran therefore scores poorly overall in the BMI Logistics Risks Index, with 46.4 out of 100 ranking the country 13th out of 18 states in the MENA region. However, there is potential for improvement in this score, as Iran's transport network is adequate for meeting its supply chain needs, and the country is well positioned to develop a role as a transit point for trade between the Middle East and Asia. In addition, the lifting of sanctions, which began in 2013, will gradually start to create opportunities for investors in this large and underdeveloped market.

The growth of Iran's...

Iran Trade & Investment

BMI View:

There are significant risks to potential investors considering entering Iran with regards to the imposition of international restrictions and sanctions by many countries, particularly in the developed world, hampering both external capacity for trade and investment, but also hindering Iran's access to financial markets and trading mechanisms internationally. Iran has been awarded a score of 28.1 out of 100 for its Trade and Investment Risk. This places it in fourth lowest position regionally out of 18 countries.

This is particularly prevalent in terms of Economic Openness, for which Iran is awarded a score of 21.9. In this section, the main risk is of international sanctions limiting the ease and ability of trading with or investing in Iran. Though Iran possesses around 7% of the world's natural reserves including 10% of the global proven oil reserves and 16% of the world's natural gas reserves, this wealth is difficult to invest in due to...

Iran Industry Coverage (26)

Agribusiness

Iran Agribusiness

BMI View:

BMI View: The removal of almost all sanctions on Iran's economy in January will herald a new era for the country. In terms of agriculture, the return of economic growth will have the most rapid and direct impact on consumption. Production and investment in the supply chain will also benefit, but over the longer term. Therefore, production expansion will be slower than consumption growth in the coming years and Iran will remain a large and growing importer of key commodities. The lifting of sanctions will also lead to a normalisation of trade flows, which will encompass a rise in imports and the re-diversification of suppliers.

Agribusiness Market Value
BMI Market Value By Commodity (2012-2020)
...

Autos

Iran Autos

BMI View:

BMI View: The automotive industry is Iran's second biggest industry with oil and gas being its largest. Passenger vehicles will receive a significant boost as western brands, which are preferred by local consumers, re-enter the automotive market as sanctions are eased in 2016. The positive outlook for the infrastructure industry will provide support to the commercial vehicle segment.

Total Vehicle Sales And Production Boosted By Easing Sanctions
Total Vehicle Sales And Production
...

Commercial Banking

Iran Commercial Banking

BMI View:

...
Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

Consumer Electronics

Iran Consumer Electronics

BMI View:

BMI View: We made revisions for the Iran consumer electronics market in our Q415 report to better reflect the growth potential and historical data in the market. Following the nuclear deal in July 2015, we have also revised the potential for future prospects. Under our revised outlook we expect consumer electronics spending growth to accelerate from 2016 as the easing of sanctions makes a positive contribution through increased supply of devices and formalisation of retail, which will drive down prices and catalyse volume growth, enabling vendors to tap into positive fundamentals including population and income growth. We do, however, continue to stress downside risk and uncertainty surrounding the outlook for Iran, including political and operational risk and the challenging economic environment.

...

Defence & Security

Iran Defence & Security

BMI View:

BMI View: We expect Iran to reach a nuclear deal with the P5+1 powers in 2015, leading to a lifting of sanctions over coming quarters. This will facilitate a return to economic growth; however, progress will slow, and Tehran's military spending will therefore remain modest on a regional comparison in the short-term. That said, demand for defence equipment will be strong, as Iran continues to provide assistance to Shi'a groups across the region; seeks to narrow the gap to rival Saudi Arabia's more technologically advanced military; and invests in weapons systems to protect against a potential US/Israeli attack. Meanwhile, the government remains ...

Freight Transport

Iran Freight Transport

BMI View:

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 2020, across all freight modes.

We forecast that total Iranian trade will see a return to real growth in 2016, following four consecutive years of decline from 2012 to 2015, as the effect of sanctions removal takes hold. The removal of almost all sanctions on Iran's economy - which we expect to occur in H116 - will cause a...

Iran Freight Transport

BMI View:

BMI View: In 2016, we forecast a relatively healthy year of growth across the freight modes in Iran, predicated predominantly on the news that the removal of almost all sanctions on Iran's economy will cause a significant uptick in economic growth over the coming years, reaching between 3% and 6. This will also benefit both imports and exports as trade links are built and strengthened. We expect Iran's economy to emerge from recession as the country complies with demands on its nuclear programme. Iran has huge potential across almost all sectors (not just oil and gas which attracts most of the attention), and we highlight industries related to the consumer - especially autos and food and drink.

Latest...

Infrastructure

Iran Infrastructure

BMI View:

BMI View: We maintain our construction industry growth forecast for Iran at 3.2% real growth in 2016 as we expect international sanctions to be lifted from H116. This will result in the gradual return of private investment in the country, which will considerably benefit the infrastructure sector. Although we anticipate investment opportunities across all sectors, railway projects will attract considerable investment.

Latest Updates And Structural Trends

  • We forecast 3.2% y-o-y real construction industry growth in Iran in 2016 and an average of 4% over the next five years as a result of the lifting of international sanctions.

  • Persistently low oil prices - our Oil & Gas Team forecasts Brent to average USD54.0/bbl in 2016 - will reduce government revenue,...

Insurance

Iran Insurance

BMI View:

BMI View: We hold a positive outlook for Iran's developing insurance market. Gradual reintroduction into the global economy will boost growth across a range of financial and manufacturing sectors over the course of the forecast period through to 2020, driving demand for various non-life products on both a group and individual basis. While basic lines such as motor and health will continue to dominate, we do expect to see developments in smaller lines such as property, transport and personal accident insurance as the market matures and diversifies. The small life insurance market is also expected to grow, as household income rates rise and demographic trends stimulate demand. The relaxation of sanctions on Iran is likely to entice more foreign insurers to...

Medical Devices

Iran Medical Devices

BMI View:

BMI View: Iran will remain an attractive market in the region due to its large size, but it will register low growth in US dollar terms, due to the depreciation of the rial. With a deal over the country's nuclear activity reached in July 2015, the easing of international sanctions should see a rise in imported medical devices into Iran over the coming months. We do not expect a sharp rise, however, as import growth will likely be tempered by lower oil prices and the country's lack of investment over the past decade.

Projected Medical Device Market, 2014-2019
Total (USDmn) ...

Metals

Iran Metals

BMI View:

BMI View: Tin prices will be capped by US dollar strength in 2016, leading us to trim our price forecast to USD14,500/tonne. Beyond 2016, prices will recover gradually as the global tin market posts sustained market deficits and inventories dwindle.

...
Global - Tin Supply, Demand & Price Forecasts
2014 2015e 2016f 2017f

Iran Metals

BMI View:

BMI view: We have revised our aluminium price forecast from USD1,575/tonne to USD1,600/tonne in 2016, as the tightening market provided an earlier than expected floor in Q116. Aluminium prices will gradually edge higher as the global market moves into a deficit by 2018.

...
Global - Aluminium Supply, Demand & Price Forecasts
2014 2015e 2016f 2017f

Iran Metals

BMI View:

BMI View: Nickel prices will bottom in 2016 as weak production drags the global market into deficit. For instance, we expect Chinese imports of nickel to grow over the coming quarters. Prices will begin 2016 weaker than we had previously expected and we have thus revised down our 2016 average price forecast to USD9,000/tonne from USD10,500/tonne.

...
Global Nickel Forecasts
2013 2014 2015e

Iran Metals

BMI View:

BMI View: We have revised down our average copper price forecast for 2016 to USD4,900/tonne. We expect prices to find a floor over the first half of 2016, and begin to stabilise thereafter, supported by production cuts and modest consumption growth.

Global - Copper Supply, Demand & Price Forecasts
2014 2015e 2016f 2017f 2018f ...

Iran Metals

BMI View:

BMI View: Gold prices will prove resilient in 2016 due to a dovish shift in global monetary policy and elevated systemic financial sector risks. However, we do not foresee a sustained multi-year recovery and the mining sector will thus remain under significant stress. We forecast slowing mine production growth and increasing consolidation.

BMI Gold Forecasts
2014 2015 2016f 2017f ...

Iran Metals

BMI View:

BMI View: Global steel prices will remain subdued due to a persistent steel oversupply over the coming quarters. From 2017 onwards, steel prices will gradually edge higher as the global steel surplus will narrow due to Chinese supply moderation.

Steel Price Forecast
2014 2015 2016f 2017f 2018f 2019f...

Iran Metals

BMI View:

BMI View: We maintain our average zinc price forecast for 2016 of USD1,750/tonne. We expect zinc prices to reach a floor over the first half of 2016, and begin to stabilise thereafter, as production cuts shift the market to a deficit.

...
Global - Zinc Supply, Demand & Price Forecasts
2014 2015e 2016f 2017f 2018f

Iran Metals

BMI View:

BMI View: Lead prices will gradually edge higher as the global lead market will shift into deficit by 2017 as production growth will slow over the coming years.

...
BMI Lead Price Forecast
Current* 2016f 2017f 2018f 2019f 2020f

Mining

Iran Mining

BMI View:

BMI View: The mining sector of the Middle East and North Africa will see strong growth in over the coming years, especially given easing sanctions on Iran. With low base effects, governmental will to increase non-oil revenues and significant resources it appears the region is set for strong growth. We highlight Turkey and Northern Iraq as key areas for growth. That said, the region will remain peripheral in the global mining sector as it continues to underperform due to political instability in much of the region.

The key issue in the Middle East's mining sector presently is Iran's ongoing negotiations with Western powers. Our core scenario is for sanctions to be eased from Q116 which will have be a game changer for the country's beleaguered mining industry...

Oil & Gas

Iran Oil & Gas

BMI View:

BMI View: Gas production and consumption will see a substantial ramp-up in 2016 due to new phases of South Pars increasing gas availability. The lifting of sanctions in January 2016 will allow for oil production to increase by around 600,000b/d by year-end. New refining capacity will eradicate net fuels imports from 2017.

...
Headline Forecasts (Iran 2014-2020)
2014e 2015e 2016f 2017f

Petrochemicals

Iran Petrochemicals

BMI View:

The lifting of sanctions will stimulate an immediate export boost for the Iranian petrochemicals industry, which has been operating well under capacity even as it has expanded in recent years. The government has ambitious plans for the sector with the hope that foreign investment will enable it to leverage its massive upstream resources to expand basic chemicals output. However, Iran continues to face infrastructural and regulatory difficulties and a depressed market outlook. Until these are overcome, the industry will struggle to meet the target of more than doubling petrochemicals capacity to 129mn tonnes per annum (tpa) by 2021.

The surge in capacity will not be sustainable if feedstock supply is not forthcoming and markets do not absorb output. Some complexes are suffering feedstock shortages, particularly during winter months. Iranian petrochemical complexes need 30-35mn cubic metres of gas per day. Besides pressure on supply, Iranian...

Pharmaceuticals & Healthcare

Iran Pharmaceuticals & Healthcare

BMI View:

BMI View: With sanctions lifted, Iran has improving prospects of opening up to a wider diversity of trading partners and providing strategic opportunities for multinational pharmaceutical companies. By reintegrating into the financial transaction system SWIFT, the import of pharmaceutical-related products will ease and prevent future drug shortages. Both innovative and generic drugmakers will look to gain a local presence within the country, given the growing demand for essential medicines and likely improvements to healthcare provision.

Headline Expenditure Projections

  • Pharmaceuticals:...

Power

Iran Power

BMI View:

BMI View: The signing of the Joint Comprehensive Plan of Action between the Iranian government and the PG+1, comprised of the five permanent members of the Security Council and Germany, an agreement aimed at bringing an end to sanctions on Iran through agreement on the country's nuclear programme, has precipitated considerable activity among foreign investors looking to take advantage of the country's considerable market for electricity, both in terms of domestic supply and export.

Since the signing of the agreement, several companies, many of them European, and several government delegations have visited Iran, signing agreements with the government aimed at installing a number of new power plants in the country. In Q116, Iranian authorities announced potential co-operation over nuclear power plants with both Hungary and Japan.

However, BMI's forecasts for the power sector...

Shipping

Iran Shipping

BMI View:

BMI View: The historic deal agreed between Iran and the P5+1 powers in Vienna on July 14 - assuming it passes through parliaments - will see growth return to the Iranian economy and its shipping sector over the coming years. This recovery will not be immediate and there remain significant challenges to growth in the near term. The general trend is that Brent crude will average considerably less than in recent years - we forecast an average of USD59 per barrel in 2015 - meaning that the economic boost from easing sanctions will be limited. Iranian consumers will continue to be under pressure, and a massive ramp up in containerised goods imports is unlikely. However, as real GDP growth in the country picks up, we expect pent-up demand from the growing middle class in the Middle East's largest population to drive growth in imports of containerised...

Telecommunications

Iran Telecommunications

BMI View:

BMI View: The removal of sanctions on Iran in January 2016 is expected to have a positive impact on the level of foreign direct investment in the country, with GDP forecast to experience rapid growth over our medium-term forecast period from 2016-2020. The mobile segment is set to continue on its strong growth trajectory due to the increased accessibility of 3G and 4G services. The wireline segment will however continue to struggle because of the growing preference for mobile solutions.

Latest Updates & Industry Developments

  • Removal of sanctions in January 2016 should encourage increased foreign direct investment into Iran, with BMI's Country Risk team predicting GDP to rise from 2.9% in 2016 to 4.8% in 2020.

  • Since the launch of 3G and 4G data services, the Iranian mobile market...

Water

Iran Water

BMI View:

BMI View: Iran is continuing to extract increasing amounts of water each year. This is largely due to population growth, however, drought concerns and water scarcity make this consumption rate unsustainable, in our opinion. One of the largest consumers of water is the agricultural sector, where very heavily water-dependent crops continue to be grown. The government has recently announced it will be putting limits on this usage and has also changed its stance from very strongly promoting the building of dams to supporting the development of a better wastewater network. The reuse of wastewater, especially in industry and agriculture, could go a long way in aiding the water shortage.

We view the Iranian water sector as one of the least appealing with regards to...

Latest Iran Articles

  • The growing number of MoUs signed between Iran and international partners f...

  • We have upgraded our Saudi Arabia crude production forecast, reflecting the...

  • CBOT wheat prices will remain on the upside over the remainder of 2016, sup...

Latest Iran Blogs

  • BMI View: The US and its allies have only limited military options to fight...

  • The nuclear deal between Iran and the 'great powers' effectively makes a tr...

  • The nuclear deal between Iran and the P5+1 'great powers' is highly signifi...

Latest Iran Podcasts

  • The lifting of sanctions on Iran on January 17 throws open vast opport...

  • A prospective agreement between the P5+1 and Iran over Iran's nuclear ...

  • As a decade of rising oil prices comes to an end, OPEC's decision to l...

×

Download PDF

By submitting this form you are acknowledging that you have read and understood our Privacy Policy.

Thank you for your interest

You will shortly receive your free executive summary by email.