The BMI Research (formerly Business Monitor Online) revised its construction industry growth forecast for Iran in 2016 from 3.2 percent to 4.5 percent thanks to the removal of the majority of international sanctions and release of new historic data.
The lifting of sanctions will result in the gradual return of private investment as well as improve Iran's access to funding for projects, the report said. As such, the country's risk profile – particularly in the financing stage of the project life cycle – will foreseeably continue to improve.
In addition, the British research institute estimates an average of 6.1 percent growth in Iran’s construction industry over the next five years as a result of the lifting of international sanctions and strong demand for infrastructure. However, persistently low oil prices will reduce government revenue, limiting public spending in infrastructure.
As the published report proves, the lifting of sanctions is already having a positive impact on Iran's capability to finance infrastructure projects. Reflecting the reduced risk in the financing stage, Iran now scores 34 out of 100 in the Financing Risk pillar of BMI’s Project Risk Index (PRI), from a previous score of 18.8.
Moreover, greater competitiveness in Iran's labor market will be required to support growth in the construction industry, according to the report.
BMI Research is a research firm that provides macroeconomic, industry and financial market analysis, covering 24 industries and 200 global markets.
(Source: BMI Research)