Iran Country Report Jan17 - January, 2017

February 17, 2017

Iranian economic growth in the first half of the current year (started last March 21) amounted to 7.4%, according to the Central Bank of Iran (CBI) Governor Valiollah Seif.

The CBI chief noted that in the first quarter of the year growth reached 5.4%, while in the second quarter it was 9.2%. The first-half growth rate is an improvement on the forecast 4.4% delivered over the whole of the previous year.

One year after key international sanctions were lifted, Iran’s economy is only now starting to see the benefits of foreign investment. In the days preceding and following the inauguration of US President Donald Trump, several international companies quickly signed off on deals in bids to outmanoeuvre any possible interventions from the new administration. Many potential foreign investors in Iran are most certainly playing a wait-and-see game with Trump.

Great excitement was generated among the Iranian population on January 12 when an Airbus A321, the first Western-made airliner to be delivered to Iran in decades, was handed over with full livery to IranAir. Boeing, the Chicago-based airplanes, rockets and satellites corporation, which has not delivered a plane to Iran since 1977, last December agreed a contract to supply Iran with 80 aircraft valued at $16.6bn.

German airline Lufthansa is another aviation player that’s been signing on the dotted line with Iran. On January 19, it announced a Lufthansa/IranAir code-sharing agreement that had been blessed by the Tehran airport authorities. It commences on February 1.

Iran was on January 14 able to boast of a threefold post-sanctions jump in foreign direct investment (FDI) in the current Iranian year to date (the year started on March 20, 2016). Speaking to Iran’s Financial Tribune English daily on January 26, Seyed Hossein-Salimi, head of the Foreign Investment Group linked to Iran's Chamber of Commerce, Industries, Mines and Agriculture, said the increase meant foreign investors had injected around $11bn in FDI into the economy over roughly 10 months.

On January 17, it revealed Iran’s flagship bourse had enjoyed a 42% increase in flows of foreign capital over the past year. In the year that followed the January 2015 removal of sanctions, over 200 foreign investors invested cash in the main indices.

Groups such as the American Coalition Against Nuclear Iran or United Against a Nuclear Iran (UANI) may list an intimidating range of risks in doing business with Iran – take their claims of kidnap and arrest risk, front company risk, insurance risk and hacking and cybersecurity risk for starters – but Europe doesn’t appear to be listening. January 24, for instance, was a good day for the Iranian passenger cars market with the Mammut Group announcing it was setting up a production line with Germany's Volkswagen to assemble VW Polo hatchbacks, just one of several models it hopes to eventually turn out.


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