Forecasted economic growth lures MasterCard issuer to Iran
Baku, Azerbaijan, Feb. 10
By Farhad Daneshvar - Trend:
Following recent report circulated by Iranian media regarding a plan by TransForex, a MasterCard issuer, to expand its operation to the Islamic Republic, a UK-based Iranian expert has suggested that forecasted growth for the economy, promises high returns and positive growth in the market to foreign service providers of financial services.
"Given the magnitude of the market and the size of the middle class Iranian households the entrance of TransForex to the country is indicative of the appeal of the financial service to outside credit providers to households and small businesses," Mehrdad Emadi, consultant at the U.K.-based Betamatrix International Consultancy, told Trend.
A recent IMF report estimates that Iran's real GDP growth is projected to accelerate to 4-5.5 percent in 2016/17 and to average 4 percent throughout the medium term.
Emadi believes that financial sector in Iran is quite thin in terms of financial instruments and the level of competitiveness.
According to him, the spread of interest rate differences between different lenders in the official banking system of Iran is 16 percent (the gap between high cost versus low cost lenders) which is twice as high as those observed in the UAE and Kuwait where the financial market is more developed.
Iranian financial markets have been isolated from the world capital markets over the past several years, they are uncompetitive and are open to the abuse of market power by large lenders, he concluded.
Over the past decade in a bid to curb Iran's nuclear program, the international community took measures against Tehran, including restrictions imposed on the country's financial system, as well as industry, which have had a catastrophic impact on Iranians' economic situation and life conditions.
Following a long-awaited nuclear deal clinched between Tehran and the world major powers most of the international sanctions against Tehran were lifted on Jan. 16.