“It’s like Turkey, but with 9% of the world’s oil,” says Charles Robertson of Renaissance Capital. No wonder the business press is now abuzz with analysts highlighting Iran’s potential.
The preliminary deal it has struck with the West clamps down on Iran’s nuclear programme in exchange for the gradual removal of sanctions, assuming various details are nailed down by June and rejectionists on either side don’t derail the deal. That’s good for the Iranian economy, which has suffered from hyperinflation and anaemic growth during its long period of isolation. It promises eventual riches for global oil majors, especially as many of Iran’s oil fields have yet to be developed.
The economy is highly diversified, says Robertson; people were forced to learn to make a wide range of products when they were largely cut off from the global economy. The young, 81-million-strong population points to a vigorous future domestic market, says Craig Mellow in Barron’s.
The government has been trying to liberalise the economy and the stockmarket is the region’s second-biggest. Putting in place the infrastructure for foreign investors to gain access to the stockmarket efficiently will take time, but given Iran’s potential, there will be no shortage of interest.