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Sanctions removal unlikely to help Iran’s crippling economy

Sanctions removal unlikely to help Iran’s crippling economy

Date: 30 December 2015 10:07

Baku, Azerbaijan, Dec. 29

By Farhad Daneshvar – Trend:

Despite the expectations for the removal of international sanctions against Tehran, leading indexes like the Tehran Stock Exchange Index (TEPIX) don’t predict optimistic future for business conditions in Iran, says Hamid Mirmoeini, an Iranian market expert.

As 70 percent of economic activities in Iran is undertaken by the government, and given the fact that most of the government’s revenues depend on oil income, the sharp decline in oil prices has caused economic difficulties in the country, Mirmoeini told Trend Dec. 29.

TEPIX overall index between June 5, 2014 and December 28, 2015

The expert explained that although the removal of sanctions may increase the volume of Iran’s exports, it won’t have a considerable impact on the country’s income as the prices have fallen dramatically.

Mirmoeini believes the plunging oil revenue will have a crippling effect on the government’s development projects, resulting in general slowdown in economic activities and finally worsening the recession.

President Hassan Rouhani, after assuming office in August 2013, pursued contractionary policies to bring down the 35 percent inflation in Iran.

“Apparently the government will continue its contractionary policies in the near future aimed at combating inflation,” said Mirmoeini.

He recalled that after the removal of sanctions, Iran’s frozen assets in foreign countries will be released.

“However, it is difficult to estimate how it [the release of frozen assets] will impact the economy as the value of the assets remains unclear and the government hasn’t announced any plan on spending them,” he added.

The expert, further speaking about foreign investors, said Iranian government hasn’t proposed any master plans and targets to engage the investors in economic activities.

He concluded that President Rouhani’s administration, in order to encourage foreign investors, should introduce policies aimed at providing economic security in the country.

Under a historic nuclear deal between Iran and the world powers inked in July, Tehran has launched a process to curb its nuclear activity, after the completion of which international sanctions on the Islamic Republic’s economy and industry will be lifted.

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