Country risk reference rating: Level 7 (7/9)
Country Risk Outlook: Stable
Economic and trade risks
Iran’s economy is too dependent on oil exports and is susceptible to oil price fluctuations, and its ability to withstand external risks is relatively limited. The economic blockade and sanctions imposed by Western countries on Iran have largely restricted the space and vitality of Iran’s economic development. At present, Iran’s economy is experiencing a significant decline in growth rate, high inflation and many other problems, and economic risks have increased significantly. In 2012, Iran’s nominal GDP was US$453.97 billion, and its per capita GDP was US$6,000; its real economic growth rate was -3.0%, and the inflation rate was 19.9%. In order to ensure the normal development of the country’s oil industry amid the escalating sanctions from the United States and Europe, the Iranian government has put pressure on foreign oil companies to complete their oil and gas investment projects in Iran as soon as possible in accordance with the contracts; on the other hand, it has required domestic banks to Provide credit support to important domestic companies, especially oil and gas companies, to ensure the normal operations of domestic companies, especially oil and gas companies. However, the efforts made by the Iranian government have not changed the situation of continued decline in oil production.
Bilateral trade
China and Iran are highly complementary and have huge space and potential for economic and trade cooperation. Currently, China is Iran’s largest trading partner, and Iran is also one of China’s major trading partners in the Middle East. In 2011, the total trade volume between China and Iran was US$45.1 billion, which fell to US$36.47 billion in 2012 due to sanctions from Western countries. At present, the main obstacles to the deepening of China-Iran economic and trade cooperation include: sanctions from Western countries, tightened import controls in Iran, and Iran’s increased anti-dumping tendency against Chinese products. In recent years, in order to resist sanctions, Iran has reduced the import of more than 170 commodities, most of which are from China. products etc. In addition, the two countries are far apart, have fragile transportation lines, and have large language and cultural differences, which are also important factors affecting the economic and trade cooperation between the two sides.
Business environment
The business environment in Iran is poor. Public financial information of enterprises is difficult to obtain, power infrastructure is insufficient, and investor protection is insufficient. It ranks 145th among 185 economies in the “2013 Doing Business Report” released by the World Bank, lower than countries in the Middle East and North Africa. average level. In recent years, due to the needs of economic development, the government has encouraged foreign investment. In most fields, foreign capital can operate in the form of joint ventures, partnerships or sole proprietorships. However, in the fields of state-owned monopoly operations such as oil and gas and large mines, foreign capital is only allowed to operate in the form of “returns”. Enter through specific forms such as “purchase”. The Iranian government also promises national treatment for foreign investment and provides preferential treatment in taxation and other aspects. However, due to the recent intensification of Western sanctions on Iran, Iran’s investment environment has tended to deteriorate: first, it is more difficult to import equipment; second, the exchange rate exchange risk caused by the continued depreciation of the local currency has increased; third, the political and security risks faced by investments in Iran’s petrochemical sector increase.
Overall risk assessment
Overall, Iran is a country with relatively high political and security risks. Iran’s political situation is relatively stable, and the government has strong control over the country. Iran has sharp conflicts with the West and neighboring countries on the nuclear issue: on the one hand, it increases regional instability and even triggers regional armed conflicts; on the other hand, Western countries continue to strengthen sanctions on Iran, indirectly causing many domestic social and people’s livelihood problems, and thus Affect the stability of the domestic situation. In terms of economy, the oil industry is the pillar of Iran’s economy and relies heavily on the external environment. Western countries’ economic blockade and sanctions on Iran have to a large extent restricted the space and vitality of Iran’s economic development. In addition, high unemployment, high inflation, and slow economic structural adjustment are also problems that Iran has to face in its economic development.
Based on the analysis and assessment of the current overall situation, Iran’s national risk reference rating is 7 (7/9), with a significant national risk level and a stable national risk outlook.
(Issuing agency: China Export and Credit Insurance Corporation)
