Sanctions removal to impose short-term, psychological effects on Iran’s economy

Sanctions removal to impose short-term, psychological effects on Iran’s economy
16:32 16 Yanvar 2016
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Baku, Azerbaijan, Jan. 16

By Fatih Karimov – Trend:

Removal of international sanctions against Iran will have psychological effects on the country’s economy, meanwhile permanent effects need serious steps by government, Iranian expert Reza Taghizadeh told Trend Jan. 16.

The international sanctions imposed on Iran with regard to its nuclear program is expected to be removed as the Joint Comprehensive Plan of Action (JCPOA, aka nuclear deal) enters implementation phase on Jan. 16.

Taghizadeh said that the JCPOA is a political document and the sanctions’ removal is a political decision as well.

“Political events have psychological influence, which is short-term,” he said, adding it should be accompanied with economical measures by government to have mid-term and long-term effects.

Iran will not be able to increase its oil output immediately after sanctions are removed, Taghizadeh said, adding that at least six months are needed for Tehran to increase its output capacity by 500,000 barrels per day.

The expert however said the JCPOA implementation will lead to oil price fall in short-term.

“The decreasing trend of oil price may continue for a while,” he added.

Taghizadeh further said that by removing sanctions, obstacles on Iran’s foreign trade will be removed as well, but Tehran’s foreign currency reserves are not enough to help the country to boost its trade immediately.

He also touched upon the issue of some $100 billion worth of Iran’s frozen assets abroad, which will be released once nuclear deal comes into force as an opportunity that can be used by government to improve the economy.

“In short term, foreign partners and investors will wait and monitor Iran’s market development and will avoid making big investments in the country,” said Taghizadeh. “Their visits to Tehran as big trade delegations in recent months are for selling goods rather than making joint investments.”

The expert also believes that Iran should make reforms in polices on the region and take sides with mainstream countries, in order to gain confidence of foreign investors.

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