Iran’s central bank aims to lower inflation to single digits by 2017 and spur economic expansion as a landmark nuclear deal with world powers rolls back global sanctions, according to a top official.
“The impact of lifting sanctions will help us follow on the path of lower inflation and stimulate economic growth,” Peyman Ghorbani, vice governor for economic affairs at the Central Bank of Iran, said in an interview at his Tehran office on Monday before news of the historic agreement emerged. “When these weights are lifted from the economy, then in all likelihood we can reach those goals much more quickly.”
Envoys from Iran and a group of six nations have reached an accord that curbs the Islamic Republic’s nuclear program in return for an easing of restrictions that slashed oil exports and cut the country off from global finance.
Since taking power in 2013 and seeking to break Iran’s isolation, the administration of President Hassan Rouhani has stabilized the currency and curbed inflation. Under the previous government, price gains accelerated to more than 40 percent.
Inflation slowed to 15.6 percent in June. Ghorbani said the bank is targeting a rate of 14 percent by March next year, and single-digit inflation by late March 2017. The last time Iran’s rate dipped below 10 percent was in 1990, according to data on the central bank’s website.
The economy grew 3 percent in 2014 after two years of contraction that were partly the result of sanctions. Iran’s economy is 15 to 20 percent smaller than it would have been without sanctions enacted after 2010, according to a January report of the Congressional Research Service.
Ghorbani declined to provide a growth forecast as that would depend on the timing of sanctions relief. He said the first signs of improvement in Iran’s economy due to the lifting of sanctions should be seen in early 2016 as investors return.
Bank officials have held meetings with overseas business delegations, he said, citing Iran’s energy, tourism, automobile, IT and transportation sectors as potentially attractive for foreign investors.
In a report on Monday, investment bank Renaissance Capital described Iran as the most important economy still closed to institutional investors, and predicted interest will climb dramatically over the next year.
“Iran is on course to change significantly over the next decade, with or without a deal, but we see the greatest upside via opening up to investment. We expect the most bullish sentiment in the first year,” RenCap said in its report published before news of the nuclear accord broke.
Other economists sounded a note of caution. Emirates NBD in its latest report, also published Monday, said Iran’s reintegration into the global economy will be hindered by a probable lack of clarity on how fast sanctions will be removed.