After the lifting of economic sanctions, Iran offers a wealth of business opportunities for European countries. Update on the most promising sectors and the countries most likely to benefit.
Huge needs. After the lifting of economic sanctions decided by the United States and the EU in protest against Iran’s nuclear programme, Iran’s needs are huge. With more than 78 million inhabitants, this country was embargoed by the US in 1996, then by the EU in 2012. Iran has since slowed down considerably. It now needs to modernise its industry, its transport, its road infrastructure, etc. An economic insight memo by Euler Hermes forecasts annual growth in industrial activity of almost 5%, with a potential increase in imports and exports of more than 20% in 2016. A number of leading French groups are already lined up, such as civil engineering giants like Vinci, Bouygues and Eiffage, or water distribution and purification system specialists such as Veolia Environnement and Suez. SMEs are also involved: see the following article (in French) about SMEs in the Alsace region: Six PME alsaciennes vont s’envoler pour l’Iran.
See the video by DW Business on German firms willing to go to Iran (2 min 55 sec).
Energy, automotive and retail trade. These are the three sectors that Euler Hermes considers to be the most promising for businesses:
- Energy. The lifting of sanctions should unblock the energy sector, in particular the oil sector (which represents 25% of Iran’s GDP). Iran plans to increase its oil production of 600,000 barrels per day in 2016 to quickly get back to its pre-sanction production levels of 4.1 million barrels per day. Its leading customer is Japan (accounting for 19% of exports), followed by European countries (notably Italy and Spain), then Taiwan.
- Automotive. Despite economic sanctions, Iran is one of the region’s most important markets for the automotive sector. With 900,000 new cars manufactured in 2014, Iran places inside the world’s top 20 individual vehicle manufacturers. In 2016, it should get back to the number of registrations achieved before the sanctions, i.e. 1.4 million units, potentially reaching 1.6 million in 2017. Euler Hermes also forecasts an annual increase in local production of 15%.
- Retail trade. Euler Hermes believes that this sector is set to achieve spectacular growth given the scale of the domestic market (78 million inhabitants) and the increased purchasing power of the middle classes.
See the CCTV America video on the different approaches taken by Europe and the US in relation to Iran (2 min 25 sec).
European countries at the forefront. European countries stand to be the main beneficiaries of the lifted sanctions, with increased exports of machines, industrial equipment and agri-food products. Among them, Germany, France, Italy and the UK should be the best positioned. Exports for Germany alone are set to increase by two billion dollars. On the other side of the coin, the biggest losers will be Turkey and Russia.
If you are looking to find partners for exports to Iran, or service providers to help you in this respect, visit Europages!
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