5 years ago

MDA Technologies 4/2015

MDA Technologies 4/2015


NEWS AND MARKETS Iran deal, a new chapter for industry Sushen Doshi After almost 15 years of negotiations, Iran and the “P5+1” group of six major world powers have reached a framework agreement on Iran’s nuclear program. The nuclear deal clears the path for the end of sanctions and the emergence of a dynamic Iranian economy. Author: Sushen Doshi, editor, MDA Technologies Iran is a country of around 80 million people, has one of the most diversified economies in the Middle East and North Africa. Despite sanctions, Iran is one of the world’s top 20 economies. In the beginning of the 21 st century, Iran’s annual growth rates hovered around 5 %, sometimes reaching as high as 7 %. The 2010 round of sanctions though crippled the economy, but according to an IMF forecast, the return of positive growth in Iran is an impressive reversal from the 5 % contraction that occurred in 2012. While the Iranian economy is still largely dependent on oil exports, it has also seen significant industrial development. Iran invests more in R&D than any other Middle Eastern nation and has seen a rapid growth in its high-tech sector. In 2009, Iran’s auto industry became the 11th largest in the world, producing more vehicles than the UK or Italy. The country boasts significant development in high-tech industries such as machinery, automotive, steel, petrochemicals and medical technology along with a wide range of agricultural products, cement and other construction materials. But Iran’s industries need to modernize their production equipment and technology and it needs them Now! Impact on Germany Iranians prefer doing business with Europeans and particularly with the Germans, as they have a specially favored status. In part that’s because of Germany’s reputation for high-quality engineering. Going beyond these pragmatic considerations, Iranians have also had a long-standing cultural, business and personal ties to Germany. Historically, German engineers built Iran’s railways and bridges back in the 1920s. In the past few years the German exports to Iran grew by 30 %, as impressive as the percent growth may seem the actual volume of goods traded sums up to € 3 billion. Considering the € 3 trillion German GDP, this trade figures with Iran are very low. Over the next few years the bilateral trade between Germany and Iran could increase by as much as a factor of four, depending up on further political developments. Even in the best case scenario, new deals can’t be made operational instantly, because the infrastructure for financial transactions needs to be rebooted first. That means trade volume won’t take off until 2016. Some estimates say the bilateral trade between Germany and Iran could touch € 6-7 billion in 2016. But German industrialists haven’t been sitting and waiting for the final signing of a nuclear deal before reactivating German- Iranian business ties. Many mid-sized enterprises have been exploring prospective opportunities for months anticipating that sanctions might be lifted. In the recent weeks, flights to Teheran have been full of German businessmen. The mood has changed considerably during the past year. Suppliers of machinery and its components for all the industry sectors are keen to do business in Iran. There was also a strong presence of German firms at the annual ‘Inotex’ technology trade fair in Tehran in June. The biggest German corporations have been less visibly active, mainly due to the political pressures. But they’re now going to position themselves to grab a larger share of Iranian markets. Photographs: background fotolia z 10 MDA Technologies 4/2015

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