Iran’s economic growth likely, but needs banking reform (exclusive)
Baku, Azerbaijan, Jan. 26
By Dalga Khatinoglu, Mehdi Sepahvand - Trend:
Economic growth in the post-JCPOA era is very likely for Iran, regarded that proper banking and monetary reforms take place, former Central Bank of Iran (CBI) consultant Bijan Bidabad said.
The post-JCPOA situation is highly suitable for stock exchange, production and trade as it has lifted many former concerns, he told Trend Jan. 26.
"Also, banking relations which have been established based on SWIFT, have created preliminary grounds for foreign investment to come to Iran," Bidabad noted.
"Compared to other markets, Iran market has higher productivity. The problem is only the risk of currency rates when foreign investment comes to Iranian market. But since the JCPOA creates more stable economic situation, naturally the Iranian market will continue its positive growth rate," he said.
Regarding speculations about Iran's economic growth in the current year and the next one, Bidabad said a growth of 5-6 percent is hard to believe.
Iran's economy in 2016 and 2017 is expected to grow by 4.8 percent and 5.4 percent, respectively, the UN said in its "World Economic Situation and Prospects 2016" report published Jan. 25.
The report forecasted that the country's inflation in the mentioned period will fall to 11.8 percent in 2016 and 10.5 percent in 2017.
"But the next year four percent growth is conceivable. Also, for two years from now, five and six percent growths are conceivable if post-JCPOA optimism continues to exist," noted Bidabad.
"There are many reform points to be made," he stated, "But if the CBI and government adopt one-digit interest and inflation rates, we can expect high stability."
The market price has already adjusted to some extent to the fact that Iran's production will enter the global market. However, the pace and volume at which this will happen is unclear, which could lead to further downward price adjustments.
In the Islamic Republic of Iran, the removal of international sanctions is expected to provide a boost to economic activity, with oil production and exports forecast to recover gradually.