Iran at a glance:

Iran is the second largest economy in the Middle East and North Africa (MENA) region after Saudi Arabia, with an estimated Gross Domestic Product (GDP) of US$D 406.3 billion in 2014. It also has the second largest population of the region after Egypt, with an estimated 80.8 million people as of individuals in July 2014. Iran’s economy is characterized by a large hydrocarbon sector, small scale agriculture and services sectors, and a noticeable state presence in manufacturing and financial services. Iran ranks second in the world in natural gas reserves and fourth in proven crude oil reserves. Aggregate GDP and government revenues still depend to a large extent on oil revenues and are therefore intrinsically volatile.

The Iranian economy rebounded out of recession, with growth estimated at 3.0% in 2014 compared to a contraction of 1.7% in 2013. This comes as a result of the temporary and partial easing of sanctions imposed on Iran’s oil exports, on the supply chain in key sectors of the economy—such as in the automobiles industry—and on the transactions of international and domestic banks, as well as a rise in consumer and business confidence that a comprehensive agreement between Iran and the P5+1 is within reach.

 Iran’s non-oil exports rose 24.2 percent% in the first ten months of the current Iranian calendar year (i.e., March 21-January 20, 2015) compared to the same period last year. Furthermore, the depreciation of the real exchange rate has improved the competitiveness of the agriculture, manufacturing, and non-oil exports sectors, as well as of the hydrocarbons industry. Inflationary pressures on the economy have eased from a year-on-year peak of 35% in 2013 to 15% in 2014. This was facilitated by a number of factors including the appreciation of the Iranian Rial, the decline in global prices for key staples, and the easing of international sanctions.

Iran | Economic Forecasts | 2015-2050 Outlook

MarketsActualQ3/15Q4/15Q1/16Q2/162020 
Currency298592828027770307843108026280
GDPActualQ3/15Q4/15Q1/16Q2/162020
GDP415.34428414412410476USD Billion
GDP Annual Growth Rate0.62.691.571.441.271.16percent
GDP Constant Prices511719514925493973515697499312506314IRR Billion
GDP per capita2949.2929872995299729993005USD
Gross Fixed Capital Formation804062804892895466805302895058891551IRR Billion
GDP per capita PPP15572.831555615508155061550415497USD
LabourActualQ3/15Q4/15Q1/16Q2/162020
Unemployment Rate10.810.0910.4811.210.8310.76percent
Employed Persons220618362139855220957592211807962170746921371617
Youth Unemployment Rate25.226.4724.425.4924.8525.14percent
Population77.877.5177.2176.8876.5467.99Million
PricesActualQ3/15Q4/15Q1/16Q2/162020
Inflation Rate16.217.0918.4817.4517.945.34percent
Consumer Price Index CPI225.5234242249257338Index Points
Producer Prices214.7220226230235299Index Points
Food Inflation20.820.5819.0917.0914.89-27.09percent
MoneyActualQ3/15Q4/15Q1/16Q2/162020
Interest Rate2114.1414.1414.1414.1410percent
TradeActualQ3/15Q4/15Q1/16Q2/162020
Balance of Trade-2405-7119-7414-7551-7615-7670USD Million
Exports543046255014479949144874USD Million
Imports783582828315820783268269USD Million
Current Account-1008-3516-3038-1754-574-112USD Million
Current Account to GDP7.354.64.114.084.056.69percent
Crude Oil Production335033333331333033303330BBL/D/1K
Foreign Direct Investment4488.639213860364734341835USD Million
GovernmentActualQ3/15Q4/15Q1/16Q2/162020
Government Budget-0.85-0.52-0.27-0.2-0.14-0.08percent of GDP
Government Debt to GDP10.6313.5813.7813.813.8211.32percent
Government Budget Value-480262.9-400198-424597-432846-441096-446830IRR Billion
Credit Rating15
Fiscal Expenditure1197646.912279601317554134668913758241868425IRR Billion
Government Revenues7173847302247711757842927974101020935IRR Billion
BusinessActualQ3/15Q4/15Q1/16Q2/162020
Industrial Production9.710.210.466.47.2percent
Competitiveness Index4.024.14.14.084.084.12Points
Competitiveness Rank8377.3377.3377.6877.7973.52
Corruption Index2726.9427.4927.0326.5725.34Points
Corruption Rank136128126125123116
Ease of Doing Business130142141142142145
ConsumerActualQ3/15Q4/15Q1/16Q2/162020
Consumer Spending386454368840392140419549414811403541IRR Billion
TaxesActualQ3/15Q4/15Q1/16Q2/162020
Sales Tax Rate75.865.866.56.715.93percent

Investment in Iran:

However, the big question for foreign companies and especially for small and medium-size enterprises is how to turn this potential into concrete business.
Foreign companies that have experienced Iran can tell many stories. The common theme in all these stories is that Iran is, in many ways, different from other markets – even different from other markets in the Middle East. However, foreign companies generally have not understood the peculiarities of doing business in Iran exactly.

Every foreign company is in a different situation and there is no one universally applicable rule on how to start and how to develop business in Iran. nonetheless, there are a number of common themes that apply to many small and medium-size foreign companies. The most important of these common rules is: Take one step at a time!, test the market and don’t believe those who swear they can perform miracles and get you into business in a blink of an eye .

Iran is certainly a unique market in the Middle East. It is populous, rich in natural resources and apt to technological progress and international developments. The country’s natural resources create a significant wealth. In fact, based on a resource-based evaluation, the Iranian economy is the 20th strongest in the world.

Some of the features are highlighted below:

  1. Strategic Location:A unique geographical location at the heart of a cross-road connecting the Middle East, Asia and Europe, empowered by many inter- and trans-regional trade, customs, tax and investment arrangements.iran
  2. Market Potentials and Proximity:Vast domestic market with a population of 65 million growing steadily as well as quick access to neighboring markets with approximately 300 million inhabitants.
  3. Labor Privileges:Large pool of trained and efficient manpower at very competitive costs in a diversified economy with an extensive industrial base and service sector.
  4. Developed Infrastructure:Territory developed networking in the area of telecommunication, roads and railways across the country.iran_airports
  5. Low Utility and Production Cost:Diversified range of energy, telecommunication, transportation, as well as public utilities.
  6. Abundant Natural Resources:Varied and plentiful reserves of natural resources ranging from oil and gas to metallic and non-metallic species reflecting the country’s accessibility to readily available raw materials.iran_oil
  7. Climatic Characteristics:A four-season climatic endowment as a privilege to agricultural activities throughout the country and throughout all seasons.
  8. Fiscal Incentives:Reduced tax rates from 65% to a flat fixed 25% rate of tax income despite various tax holidays highlighted as follows:
ActivityLevel  of  ExemptionDuration of Exemption
Agriculture1No Time  Limit
Industry and Mining0.84 Years
Industry and  Mining  in Less-Developed  Areas110 Years
Tourism0.5No Time  Limit
Exports1No Time  Limit
9. Political Stability:Representative system of government based on friendly relationship with  other nations.
10. New Investment Legislation:Enactment of new Foreign Investment Promotion and Protection Act (FIPPA) to substitute the former Law Concerning Attraction and Protection of Foreign Investments in Iran (LAPFI) providing full security and legal protection to foreign investments based on transparency and international standards.