A breakdown or a breakthrough in nuclear talks between Iran and the P5+1 will have immense regional implications. Increased
economic opportunities from a breakthrough would significantly benefit Gulf Cooperation Council states, although Saudi Arabia would
see its geopolitical clout reduced. A positive conclusion of talks would also facilitate a political solution to the civil war in Syria over the
next five to 10 years, with positive implications for stability in Lebanon and Iraq.
TABLE: Political Overview
TABLE: Possible Scenarios As Diplomacy Advances
TABLE: Syria - Long-Term Scenarios
Long-Term Political Outlook
Regime Change Likely By The Next Decade
Although Iran's Islamic regime has proved resilient in the face of tremendous domestic and external pressure, we believe that it cannot
continue in its present form indefinitely. Consequently, we expect to see 'regime change' by the next decade, either through gradual
reform or a popular uprising.
Chapter 2: Economic Outlook
SWOT Analysis
BMI Economic Risk Ratings
Economic Activity
Modest Expansion In 2014 And 2015
We forecast real GDP growth of 3.2% and 2.7% in 2014 and 2015 respectively, from a 2.9% contraction in 2013. The return to growth
will be the result of improving relations with the West, more effective macroeconomic management and low base effects. The lack of a
breakthrough in nuclear talks will ensure that foreign direct investment - particularly by Western companies - remains limited.
TABLE: Possible Scenarios As Diplomacy Advances
TABLE: Economic Activity
Monetary Policy
Inflationary Environment Improving In 2014 And 2015
Inflationary pressure in Iran will be lower in H214 and 2015 compared to 2013. This will provide Iranian President Hassan Rouhani with
the necessary public support to continue talks with the P5+1 countries on the Islamic Republic's nuclear programme.
TABLE: Monetary Policy
Banking Sector I
Reform Only In The Medium Term
Declining inflation and an improved macroeconomic environment will improve the outlook for Iranian banks in 2014. That said, risks to
the stability of the industry will remain elevated this year. The government will seek to implement structural reform to the sector, which
will decrease systemic risk over the next five years.
Banking Sector II
Negative Real Interest Rates Affecting Stability
Despite gradually declining price pressures in Iran, real interest rates will remain in negative territory until 2018, while the elevated nonperforming
loan ratio will hinder borrowing. As a result, the banking sector will remain in a crisis situation despite the slowly improving
macroeconomic environment.
Chapter 3: 10-Year Forecast
The Iranian Economy To 2023
Significant Challenges Ahead
The inability of Iran to fully exploit its enormous oil & gas wealth will keep real GDP growth rates averaging 4.0% over the next 10 years,
below the strong potential of the country's economy. Iran's youthful demographics mean that private consumption and investment will
primarily drive this growth.
TABLE: Long-Term Macroeconomic Forecasts
Chapter 4: Business Environment
SWOT Analysis
BMI Business Environment Risk Ratings
Business Environment Outlook
Institutions
TABLE: BMI BUSINESS AND OPERATION RISK RATINGS
Infrastructure
TABLE: BMI LEGAL FRAMEWORK RATING
TABLE: LABOUR FORCE QUALITY
TABLE: MENA - ANNUAL FDI INFLOWS
Market Orientation
TABLE: TRADE AND INVESTMENT RATINGS
Operational Risk
Chapter 5: Key Sectors
Pharmaceuticals & Healthcare
TABLE: Phar maceutical Sales , Hist orical Data And Forecasts
TABLE: Healthcare Expe nditure Tre nds , Hist orical Data And Forecasts
TABLE: Gover nment Healthcare Expe nditure Tre nds , Hist orical Data And Forecasts
TABLE: Pri vate Healthcare Expe nditure Tre nds , Hist orical Data And Forecasts
Telecommunications
TABLE: Telec oms Sect or - Mobile - Hist orical Data & Forecasts
TABLE: Telec oms Sect or - Wireli ne - Hist orical Data & Forecasts
Chapter 6: BMI Global Assumptions
Global Outlook
Global Recovery Still On Track
Table: Global Assumptions
Table : Devel oped States , Real GDP Growt H, %
Table : BMI VERSUS BLOOM BERG CON SENSUS REAL GDP GROWTH FORECASTS, %