As Iran slowly emerges from crippling economic sanctions, Tehran eagerly eyes the vast opportunities from integration into global markets. Some Western experts say Iran has the potential to surpass Turkey and Saudi Arabia in GDP size within a decade. What factors could help Iran make a strong entrance into the world economy?
Despite years of UN and Western sanctions over its nuclear program, Iran’s economy ranks 29th in the world by GDP – well ahead of many of its neighbors. With a population of nearly 80 million, Iran has one of the largest workforces in the Middle East and a large domestic market.
Iran’s population is considerably younger than those of Western nations and even many developing economies such as Russia and China. The median age is 28.8 years in Iran, compared to 46.1 in Germany. After the 1979 Islamic Revolution, the government actively encouraged early marriage and large families with special incentives as population growth became a top priority. This large working-age population is an advantage Iran enjoys over rapidly graying Western countries.
Iran will have to diversify its economy if it hopes to compete in the 21st century. Over 80% of its exports in 2014 were petroleum or mineral products. This is comparable to other oil-rich countries like Saudi Arabia and Qatar, which are highly vulnerable to global fluctuations in global commodity prices. As oil prices founder, Iran’s economic success will be tied to its ability to compete with more advanced economies.
Sanctions relief will greatly expand Iran’s business reach around the world. Many European businesses are eagerly awaiting the opportunity to tap into this fresh market. In one early deal, flagship carrier Iran Air -- which has been handicapped since the Islamic Revolution -- agreed to buy 118 Airbus passenger planes.
Iran has a larger middle class than emerging-market nations such as Egypt and China, and young Iranians have a growing appetite for luxury goods. Traditional bazaars are starting to face free-market competition from Western-style shopping malls full of brand name goods. Some high-end European brands, such as Benetton, have already opened retail shops in Tehran.