End of sanctions and slow reentry of Iran into the world economy is a big event for Iran as well as for the world economy.
Iran is the 17th largest populated country in the world with nearly 77 million people and is bigger than UK and France. Population size shows that Iran is bigger than South Africa, the latest entrant into the BRICS group.
It is expected that besides Iran, the major beneficiaries of the removal of sanctions are India and China. For these big neighbors of Iran, it provides opportunity to get cheaper oil compared to other sources.
For Iran, sanctions have produced unstable growth, high inflation, international banking restrictions and hard currency shortages. MNCs have left and domestic firms have lost trade opportunities.
The end of economic isolation for Iran makes it the biggest country to rejoin the global economy since many Eastern European countries in the early 1990s.
It is expected that removal of trade sanctions will place Iran a major player in the region with China’s strong efforts (road and belt policy) to access the Persian Gulf through both land and sea route.
Another point that makes Iran vital in the region is its proximity to Central Asia. The land locked Central Asian countries’ best and quick reach to the seas is through Iran.
With its reasonable size, trade potential and demographic profile, Iran is an economy that missed the Emerging Market bench.
Iran’s strategic position in the Persian Gulf along with huge hydrocarbon reserves and the sizable population makes its reentry a big event. Already, reports indicate that the oil market is experiencing a bump.