Iran’s economy poised to grow post lifting of sanctions

Hassan Rouhani - Russian Presidential Press and Information Office - Wikimedia CommonsIran’s President Hassan Rouhani tweeted, “With this unnecessary crisis resolved, new horizons emerge with a focus on shared challenges.” (Image source: Russian Presidential Press and Information Office/Wikimedia Commons)With Iran getting relief from biting sanctions on its oil industry and embargoes on its finances, the Middle East nation is set to receive billions of dollars that will allow for its economic resurgence in the region

Sanctions on Iran have been applied in various stages by many countries, starting with USA in 1979 and reached their most extreme in 2012 when the country was isolated from the global economic system. The worst-hit negative sectors were banking, energy and transport sectors, with many Iranian ports being blacklisted. Foreign investors had to leave the country and the economy contracted.

According to IMF estimates, Iran’s per capita income at purchasing power parity in 2012 was US$12,000 and after the sanctions were introduced, it dropped to US$6,500 in 2013.

Iran adapted by reducing its dependence on its oil and gas industry, which was heavily under sanctions, and began earning a majority of its revenue from sectors other than oil and gas such as minerals, cement, urea and other agro-industrial products. However, investment in business ventures has been in short supply.

With the lifting of sanctions, foreign banks that have been holding Iran’s oil revenues generated before 2012 will be returning about US$100bn to the country and that would, in turn, lead to new business projects worth billions of dollars across a slew of industries.

The agreement is still to be debated in the US Congress, but US Presidnt Barack Obama has assured that he will veto any measure to block it. “This deal offers an opportunity to move in a new direction,” Obama said. “We should seize it.”

Iran’s President Hassan Rouhani was quick to present the deal as a step on the road towards a wider goal of international cooperation.

“With this unnecessary crisis resolved, new horizons emerge with a focus on shared challenges,” he tweeted.

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