WB Predicts Bigger Growth for Iran

Financial Tribune - The World Bank forecasts that recent developments in Iran point to the fact that the country's non-oil sector and investments are likely to play a bigger role in the next few years, which will spur Iran's growth to an average of 4.1% in 2017–19.

According to the global lender, this positive growth outlook hinges on the assumption that some of the agreements between Iran and major foreign companies in the oil, gas and other key sectors, including manufacturing, will materialize.

"This [new landscape] would create renewed confidence, validating the very positive expectations generated in the immediate aftermath of JCPOA implementation in January 2016 and leading to gradually improving medium- to long-term growth dynamics as potential output starts to rise as well," WB said in its latest report on Middle East's second-largest economy.

The bank cautions, however, that as Iranian banks face barriers in establishing correspondent banking relations with large international banks, foreign direct investment inflows to Iran and trade relationships with the rest of the world are restrained.

The optimism is tainted by a caveat, as the bank warns there are significant downside risks to the moderate outlook. The major risk in the near future is considered to be the political uncertainty around the full implementation of JCPOA. This is likely to continue influencing consumer/investor confidence and may lead to a further weakening in private consumption and investment.

Furthermore, lower than projected oil prices could put pressure on government revenues and undermine growth.