Iran Infrastructure Report - Business Monitor International - Industry Reports

Iran Infrastructure Report

Iran Infrastructure Report - Business Monitor International - Industry Reports
Iran Infrastructure Report
Published Sep 24, 2016
62 pages — Published Sep 24, 2016
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Abstract:

Our positive view with regard to the growth prospects for Iran s wider construction sector, which we forecast to grow in real terms by -.- in ---- and by an annualized average growth rate of -.- over the next five years, is largely informed by the country s brightening macroeconomic outlook in the wake of the easing of international sanctions. Crucially, the removal of most - but not all - sanctions against Iran in January ---- has allowed international banks to underwrite the business activities of multinational corporations in Iran and afforded the country access to an estimated USD--bn in frozen assets. ...Furthermore, expansion in fixed capital formation will expand in tandem with GDP growth, increasing from - in ---- to - in ----, before averaging - over the next three years. Iran s construction and infrastructure sectors will mirror the country s macroeconomic fundamentals and emerge as key drivers of Iran s broader growth story in ---- and beyond; in particular, we expect the energy & utility and transport subsectors to attract significant investment inflows, as the government actively courts international investors in sectors characterized by decades of underinvestment and pent-up demand. We have witnessed a sharp acceleration in investment pledges in Q- of ----, particularly from South Korean and Italian firms, a trend which underpins our optimistic growth outlook for the sector and one which we expect to continue over H--- and into ----. ...Iran s construction and infrastructure sectors will mirror the country s macroeconomic fundamentals and emerge as key drivers of Iran s broader growth story in ---- and beyond; in particular, we expect the energy & utility and transport subsectors to attract significant investment inflows, as the government actively courts international investors in sectors characterized by decades of underinvestment and pent-up demand. We have witnessed a sharp acceleration in investment pledges in Q- of ----, particularly from South Korean and Italian firms, a trend which underpins our optimistic growth outlook for the sector and one which we expect to continue over H--- and into ----.

...The increase in Iran s PRI score, which jumped from --.- in ---- to --.- in ----, aligns with our view that the easing of sanctions will gradually improve the country s overall risk profile, and by extension, the risks surrounding the realization of infrastructure projects. We expect Iran s PRI gains to extend into ----, largely on the back of continued improvement in the following pillars: Financing - Cost: The Cost subsection of the Financing pillar, which measures a country s access to development funding and its real interest rate, registered the largest increase - from five in ---- to -- in ----. ...The increase in Iran s PRI score, which jumped from --.- in ---- to --.- in ----, aligns with our view that the easing of sanctions will gradually improve the country s overall risk profile, and by extension, the risks surrounding the realization of infrastructure projects. We expect Iran s PRI gains to extend into ----, largely on the back of continued improvement in the following pillars: Financing - Cost: The Cost subsection of the Financing pillar, which measures a country s access to development funding and its real interest rate, registered the largest increase - from five in ---- to -- in ----. The biggest factor behind the increased score was the removal of a majority of international sanctions, which lifted many of the restrictions preventing Iran from transacting with the international banking system and afforded the country access to tens of billions of US dollars in hitherto frozen assets. Decades of underinvestment in Iran s infrastructure sector have saddled the country with significant pent- up demand (average age of Iranian rail infrastructure is -- years), and as such, we expect a significant portion of any post-sanctions financial windfall to be invested in infrastructure projects. While bank lending will likely remain subdued throughout ----, we forecast nominal lending across all sectors to expand by -- in ---- in tandem with accelerating economic growth, which informs our expectation that Iran s Cost score is poised for further improvement (see, Huge Impediments Will Continue To

...We have revised our construction sector forecast for ---- up to -.- (from -.- ) to reflect the impact of sanctions removal on Iran s construction sector. We note a number of European banks, including Belgium s KBC Bank and German-based DZ Bank, have begun handling transactions on behalf of clients wishing to do business in Iran, a trend we expect to continue. ...

  
Source:
Document ID
1752-542X
Country
Industry
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Business Monitor International - Industry Reports—Established in 1984, Business Monitor International is a leading online publisher of specialist business information on global emerging markets. Business Monitor's range of quarterly services covers political risk, finance, macroeconomic performance, outlook and forecast, industry sectors and the business operating environment. Each Industry Report has been researched at source, and features latest-available data covering production, sales, imports and exports; 5-year industry forecasts through end-2012; company rankings and competitive landscapes for multinational and local manufacturers and suppliers; and analysis of latest industry developments, trends and regulatory changes.

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MLA:
Business Monitor International - Industry Reports. "Iran Infrastructure Report" Sep 24, 2016. Alacra Store. Dec 08, 2016. <http://www.alacrastore.com/storecontent/Business-Monitor-International-Industry-Reports/Iran-Infrastructure-Report-2026-2976>
  
APA:
Business Monitor International - Industry Reports. (2016). Iran Infrastructure Report Sep 24, 2016. New York, NY: Alacra Store. Retrieved Dec 08, 2016 from <http://www.alacrastore.com/storecontent/Business-Monitor-International-Industry-Reports/Iran-Infrastructure-Report-2026-2976>
  
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