Trade with Iran: Germany became the latest country to report a jump in exports to Iran yesterday when it released official data showing that exports to the Islamic Republic, mainly of industrial plant and equipment, grew by 15% in the first half of the year following the removal of international sanctions. “There is a huge demand in Iran for plant and equipment,” said Michael Tockuss, head of the German-Iranian Chamber of Commerce, adding that chemical products and electrical engineering were also doing well.
In June, Russia’s ambassador to Iran Levan Dzhagaryan told the state-run RT news agency that turnover between Moscow and Tehran had grown by over 70% in the first five months of the year, with Russian plant also high on Iran’s shopping list.
“Russian exports to Iran jumped by 91.5% [between January and May] and amounted to $697m,” he said, “while Russian imports from Iran increased by 16% to $158m. The boost in trade was achieved by supplies of machinery, ground vehicles and weapons.”
In a round-up of predictions immediately following the lifting of sanction In January the BBC predicted that the lifting of sanctions would:
- Allow Iran increase its revenue from oil exports by $10bn (£6.9bn) by next year at current prices
- Free up somewhere between $30bn and $50bn of foreign reserves that at the time were frozen in accounts around the world according to the Central Bank of Iran
- Boost GDP growth to around 5% in 2016-17, from almost zero (IMF)
- Save the country some $15bn yearly in cheaper trade (Iran’s first Vice-President Eshaq Jahangiri)
Since then, Iran’s oil exports have tripled; some $30bn of assets have been unfrozen, according to the World Bank; and there is a growing consensus that the country’s GDP will grow by around 4% next year.
Two major stumbling blocks to Iran’s future economic growth remain, however – low oil prices and tensions between Tehran and Riyadh that have sucked in Saudi Arabia’s Sunni allies in the region. The two countries severed ties last year, with Tehran accusing Saudi Arabia of financing jihadi groups in Syria and Iraq and the government in Riyadh claiming that Iran had been attempting to destabilise several Arab states. In January, protests erupted in Tehran after Shi’ite cleric Sheikh Nimr al-Nimr was arrested and executed in the KSA’s Eastern province in what was seen as a deliberate act of provocation. The situation is deterring many Gulf-based financial institutions, most notably within the UAE’s banking sector, from doing business with Iran – sanctions or no sanctions.