Country Economic Forecasts > Iran Islamic Rep

The plunge in world oil prices, a tight fiscal stance and delayed consumption and investment decisions probably slowed the pace of GDP growth to 1.2% in 2015/16 from 4.3% in 2014/15. But the near-term outlook has improved following the lifting of most US, EU and UN economic sanctions on 16 January, and we now forecast growth at 4% in 2016/17 and 4.7% in 2017/18.Growth will be helped by higher oil production and exports as well as lower costs for trade and financial transactions, access to foreign assets and rising foreign investment. Oil output had already risen to 2.9m b/d in December, its highest since June 2012, as storage tanks were filled ahead of sanctions being lifted, and output should rise to the pre-sanctions capacity of 3.6m b/d within six months. But reclaiming its position as OPEC's second largest producer with output above 4m b/d will require more advanced technology and hence significant foreign investment. The government has been quick to boost trade and investment relations, particularly with France and Italy, with the purchase of 118 Airbus planes and Peugeot returning to Iran leading the way.