Iran expects 2 percent of post-sanctions immediate economic growth

Iran will have at least two percent of economic growth in the first year following the removal of economic sanctions against the country subject to a possible nuclear deal, an Iranian economic expert said.

"If there would be a deal, which I am optimistic about, our estimates show that there will be one or two percent more economic growth for the country in the following 12 months, that is, in this case we will have two to three percent of economic growth" Dr. Saeed Leylaz told Xinhua on Saturday.

Tehran's stock market and Iran's currency value against the foreign currencies will rebound under psychological point of view, he said.

The Iranian expert, however, ruled out the immediate improvement in the country's oil industry and exports.

"We do not expect there will be immediate better situation for oil and so on, because the economy of Iran has very difficult problems at this moment, not only because of the sanctions, but also because of mismanagement," he added.

Iran needs to rebuild its economy; it did not have enough investment and proper productivity in oil sector for the past 10 years, and even with a deal, these big problems like mismanagement, corruption, lack of productivity, will not disappear overnight, he said.

Due to the western financial and economic sanctions, the foreign investments in the country have declined to a significant extent and Iran is striving to lure the foreign investors for the post-sanctions era, with the oil sector in much need of recovery.

"In oil industry, we have more than $250 billion shortage of investment at the moment, we need huge amount of money to rebuild our sector, because since past years, there was virtually no foreign investment in this sector," the Iranian expert said.

Iran has good experience in working with foreign partners in the oil sector and the Ministry of Petroleum has a plan and programs to attract the foreign investment in oil, gas and petrochemical sectors, Dr. Leylaz said.

"It seems that there will be $3 to $5 billion dollars new investment in the country per year, because this is the only sector which immediately is able to attract foreign investment, other sectors will take a lot more times to have foreign investment," he added.

International companies withdrew from Iran as the United States and European Union imposed sanctions on Iran's oil and gas industries during the past few years.

Earlier this month, Iran's Ministry of Petroleum announced that it would introduce a new model of contracts to replace the existing "buy back" mode of foreign investment in oil sector.

Under the new contract, foreign investors will be paid with a share of the output, head of Oil Contracts Revision Committee Mehdi Hosseini said.

The move is to encourage the foreign investment in Iran's energy sector if sanctions could be lifted as the result of the ongoing nuclear talks in Vienna.

As for China's role in Iran's economic growth after a potential deal, Dr. Leylaz said "in economy especially in technology, you cannot change your direction suddenly overnight", therefore, China will remain Iran's main partner for a long period for its competitive price of products and the cost of services as well as its state-of-art technology.

In the new era of Iran's interaction with the world, China's products and services should be more competitive with the western countries since there will be more competitors for Chinese companies in Iran.

"But at last, at the end of the day, we will be able to continue our very good ties, economic and technological ties with China," he added.