Overview: Iran Analysis Weekly Report April 17, 2016
17 Apr., 2016
Vistar Business Monitor
Iran’s economic growth is forecasted to grow by 4 percent in 2016 and by 3.7 percent in 2017, according to the April 2016 report of the International Monetary Fund (IMF).
The IMF report has put Iran’s gross domestic product (GDP) growth in 2015 at 0.0 percent while the World Bank, in its January report, estimated the country’s growth in 2015 at 1.9 percent. The World Bank has also forecasted Iran’s GDP to grow by 5.8 percent in 2016 and by 6.7 percent in 2017. The IMF has also predicted Iran’s average economic growth by 2021 at 4 percent.
Parliament approved the outline of the annual budget on April 10, with 135 members voting in favor of it, 37 voting against it, and 6 abstaining. Parliament must still approve the details of the budget. Parliament passed an emergency budget on March 14, which has provided short-term relief during the move towards finalization of the annual budget.
Major oil players are gathering to discuss a potential production freeze today, April 17, in Doha, Qatar, in what some analysts have called “the most important meeting of the last three decades.” The main unknown this Sunday is what Saudi Arabia’s position will be. The world’s largest petroleum exporter has been silent about whether it attends and what position it stakes out. As it stands now, it is believed that the most likely outcome is that producers fail to close a deal on Sunday.
The re-connection of the Iranian banking system to the world financial system is the greatest threat to both the nuclear agreement as well as Iran’s future economic growth and stability. On the one hand it suffers from out-of-date banking practices, insufficient international regulatory standards, liquidity problems, a high percentage of non-performing loans, and proper risk management procedures. On the other hand U.S. financial sanctions on Iran have caused lots of difficulties for Iranian banks to re-integrate to first tier international financial institutions. Main international banks are still very hesitant to work with Iranian banks.
On the political note, everybody believed there would be no dispute between rival political groups in Iran and the United States as soon as the Joint Comprehensive Plan of Action is implemented. But in practice it did not bring the expected results. Now the nuclear deal has turned to be an excuse both in Iran and the U.S. for attacking the administration and questioning the JCPOA. In recent move IRGC Commander General Mohammad Ali Jafari delivered a stern warning to President Hassan Rouhani on April 5: Stop opening up to the West. Furthermore, Judiciary Head Ayatollah Sadegh Amoli Larijani also stated, “If the Americans believe that they can change the nature of our foreign policy, and therefore the nature of the political system of the Islamic Republic, they are very wrong.” Larijani’s comments are in reaction to President Hassan Rouhani, who has named his policies for change on some non-nuclear matters, especially domestic economic rehabilitation and even negotiations with the West on other regional issues, “JCPOA 2.”
After the elections were verified by the Guardian Council, Reformists feel safe to run for a runoff, set to be held on April 21. This time, as never before, the runoff seems to be very sensitive because it could affect the weight of parliamentary fractions and therefore the assembly’s board of directors. Reformists seek to obtain at least 40 seats out of the remaining 61 in the runoff. They seem to be able to win 30 seats easily, but 19 seats are difficult to win. Estimates show that Reformists can have a majority of 150 in the parliament if they win all the 49 seats they are planning for. On the other hand, the more seats they lose in the competition, they would be weaker in the 10th parliament. For instance, if Reformists win only 10 seats, instead of 49, Ali Larijani will remain as speaker.
On the international note, soldiers from Iran’s conventional military service, the Army, were recently dispatched to fight in Syria. It is marking the first time the Army has operated abroad since the Iran-Iraq War. The decision to deploy Army forces underscores Tehran’s expanding support to Damascus, discrediting reports that Iran might be pulling forces out of the conflict.
Table of Contents
Notes
Overview
News Highlights
Politics and International Affairs
Economy
Trade and Agreements
Iran’s Trade Statistics in 1394 (March 2015 – March 2017)
Economic Affairs
Macro-economy
Parliament Approved 1395 Annual Budget
Iranian Government Began Issuing Treasury Bills
Why International Banks Hesitate to Deal with Iranian Banks? How the Banking System a Big Threat to Iran’s Economy? 13
Future Hope
Foreign Bank’s Risks to Enter Iran
U.S. Financial Sanctions
Moving in the Right Direction
U.S. Assistance
European Banks Cautiously Exploring Iran
Macro-economic Data
Oil and Gas
Weekly Review
Domestic Affairs
Dispute Over JCPOA Not yet Over
IRGC Commander Warns President Rouhani
The Failure
Key Political and Economic Calendar
Expected Future Events
International Affairs
Reactions to Kerry’s Recent Comment on Iran’s Missile Program Continue
The Iranian Army Gets Involved in Syria
Oman is Playing Key Role in Iran’s Efforts Re-entering Global Economy
Laws, Regulations and Policy Updates
Sanctions
Clarifying Financial Sanctions Regulations
Financial Markets
Tehran Stock Exchange
Foreign Exchange Market
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