New Market Report: Iran Business Forecast Report Q1 2014

From: Fast Market Research, Inc.
Published: Tue Nov 12 2013

Recent improvements in relations with the West bode well for the country's economy. That said, uncertainty over the outcome of negotiations over Iran's nuclear programme will ensure that risks to the outlook remain elevated.

The economy will remain a regional laggard in 2013, as investment activity stalls following the imposition of a more stringent set of international sanctions on the regime in 2012 and 2013.

Despite recent improvements, the Iranian rial will remain under fundamental downside pressure, a situation which will contribute to elevated inflation over the coming quarters.

Major Forecast Changes

We have revised our real GDP growth forecasts this quarter, and are projecting the economy to fall 1.6% in real terms in 2013, up from our previous forecast of a 2.0% contraction. We project real GDP growth of 2.4% in 2014, from 2.8% previously. Recent data show that oil production is somehow recovering, and we expect oil exports to return to positive territory in 2014. We expect macroeconomic management to improve following the victory of moderate cleric Hassad Rouhani in presidential elections in June, which will ensure that growth accelerates over the medium term.

Full Report Details at

We have revised up our forecast for the Iranian rial, which we see averaging IRR33,000/US$ in unregulated trading in 2013, compared to our previous forecast of IRR35,000/US$. We project the unit averaging IRR30,000/US$ in 2014. Although improved confidence on the country's economic trajectory and more cordial relations with the West will cushion from a dramatic drop in the value of the rial, downside pressure on the unit will remain elevated going forward.

Key Risks To Outlook

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

Higher global energy prices may lead to upside risk to our growth forecasts and downside risk to our fiscal deficit forecasts.

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Company: Fast Market Research, Inc.
Contact Name: Bill Thompson
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