Iran
Situated in southwestern Asia, Iran covers an area of 1,648,000 sq km (636,296 sq mi). Comparatively, Iran is slightly larger than the state of Alaska with a total land boundary length of 5,440 km (3,380 mi). Iran's capital city, Tehran, is located in the northwestern part of the country.
Population
Iran boasts a youthful population of nearly 80 million, according to estimates released by the United Nations in 2015, and its under-30 cohort is larger than Canada’s entire population. By 2050, Iran will be home to more than 90 million people, according to a UN projection.
The most recent World Bank data pegs the adult literacy rate at 84 per cent. This is while the youth literacy rate, measuring those 15 to 24 years old, was 98 per cent in 2012.
Languages
Farsi, commonly called Persian in the West, is the official language of Iran. An Indo-European language of the Indo-Iranian group, Farsi derives from ancient Persian, with an admixture of many Arabic words. Arabic characters and script are used in writing modern Persian. Dialects of Turkish, or Turki are spoken throughout northwestern Iran. The Lurs, Kurds, and Bakhtiari have languages and dialects of their own and the Balochi language is spoken in southeastern Iran.
About 58% of the population speaks Persian or Persian dialects, 26% Turkic or Turkic dialects, 9% Kurdish, 2% Luri, 1% Balochi, 1% Arabic, 1% Turkish, and 2% other.
Generally, not many Iranians can speak or understand English, but people’s ability to speak English varies from city to city. In major cities like Tehran, Esfahan or Shiraz which are a routine host of large number of foreigner businessmen or tourists, the number of people who can speak English are relatively much higher than other cities.
International Cooperation
Iran is a charter member of the United Nations, having joined on 24 October 1945, and belongs to ESCAP and several non-regional specialized agencies, such as the FAO, UNESCO, UNIDO, the World Bank, and WHO. Iran is also a member of the Organization of the Islamic Conference (OIC), G-24, G-77 and the Colombo Plan. It is a founding member of OPEC and a leading supporter of higher petroleum prices. Iran is one of ten members in the Economic Cooperation Organization (ECO).
In environmental cooperation, Iran is part of the Basel Convention, the Convention on Biological Diversity, Ramsar, CITES, the London Convention, the Montréal Protocol, the Nuclear Test Ban Treaty, and the UN Conventions on Climate Change and Desertification.
Economy
Iran is the second largest economy in the Middle East and North Africa (MENA) region after Saudi Arabia, with an estimated Gross Domestic Product (GDP) of US$D 406.3 billion in 2014 (World Bank).
It also has the second largest population of the region after Egypt, with more than 78.6 million people, the majority of whom are highly educated.
According to a United Nations Development Program (UNDP) report, Iran rivals Poland in its education participation (expected years of schooling is about 15), outperforming Russia, Turkey, South Africa, and Tunisia.
The country ranks second in natural gas reserves and fourth in proven crude oil reserves. The country also has a strong, but often overlooked, industrial base. Iran is the 3rd producer of cement and 14th producer of steel in the world. It is also the largest producer of cars in the Middle East. Iran’s economic growth has been consistent and remained relatively high in spite of the closed economy and trade sanctions. Over the period 1950 – 2002, Iran recorded the highest urban growth rate in the world, jumping from 27% to 60%.
Unlike the majority of Persian Gulf Arab countries which are still struggling with the challenge of diversification, real estate, manufacturing, transport, trade, restaurants and hotels, and construction account for a combined 70 percent of real GDP in Iran.
The Iranian government has implemented a major reform of its indirect subsidy system on key staples such as petroleum products, water, electricity and bread, which has resulted in a moderate improvement in the efficiency of expenditures and economic activities. The overall indirect subsidies, which were estimated to be equivalent to 27% of GDP in 2007/2008 (approximately US$D 77.2 billion), have been replaced by a direct cash transfer program to Iranian households. Domestic fuel prices have risen in parallel, thereby contributing toward reducing the deficit of the Targeted Subsidies Organization (TSO) which still remains substantial (estimated at 1.3% of GDP). A second phase of subsidy reform is being considered which would improve the targeting of the cash transfers to low-income households.
With the aim of improving the prospects for economy, the Iranian government has announced several measures including: raising the productive capacity of the non-oil segment of the economy, giving greater autonomy to the Central Bank, broadening the tax base, stabilizing and unifying the domestic currency in the market and opening up the oil sector to foreign companies for investment and technical assistance.
The economy has also benefitted from the real exchange rate depreciation through improved international competitiveness in the agriculture, manufacturing, and non-oil exports. Data from Iran’s Customs Administration show that Iran’s non-oil exports rose 24.2 percent% in the first ten months of the current Iranian calendar year (i.e., March 21-January 20, 2015) compared to the same period last year. Furthermore, the depreciation of the real exchange rate has improved the competitiveness of the agriculture, manufacturing, and non-oil exports sectors, as well as of the hydrocarbons industry. Inflationary pressures on the economy have eased from a year-on-year peak of 35% in 2013 to 15% in 2014.
In 2005, poverty was 1.45% in Iran, using a poverty line of US$1.25 per day (Purchasing Power Parity (PPP)). World Bank projections estimate that only 0.7% of the population (or half a million people) lived under this poverty line in 2010, although a large number of people are living close to it. In fact, raising the poverty line, by only US$0.5 (from US$2 to US$2.50 and from US$3 to US$3.50), could put 4%-6% of the population – over 4.5 million people - in poverty. This suggests that many individuals are vulnerable to changes in their personal disposable income and to the persistent rise in the cost of living.
According to the World Bank, the Iranian economy rebounded out of recession, with a growth rate estimated at 3.0% in 2014 compared to a contraction of 1.7% in 2013. In fact, despite being under sanctions for decades, Iran is the world’s 18th largest economy by Purchasing Power Parity. Many experts say if it was not for the sanctions, Iran could have easily been a G-20 economy.
The World Bank’s 2015 forecast, which assumes continuously low oil prices and a marginal decline in oil export volumes, suggests that the economy will expand by 0.6% while the inflation is expected to remain relatively contained at 17.3%.
12.6 per cent – Iran’s urban inflation rate, according to December figures from the Statistical Centre of Iran. The country has grappled with high double-digit inflation rates for years, as sanctions led to a steep depreciation of the national currency and sapped the purchasing power of consumers. President Hassan Rouhani has sought to curb inflation. Iran’s central bank is aiming to lower inflation to single digits by 2017, Bloomberg reported last July, citing a top official.
For a country emerging from years of economic isolation, Iran has a sizable middle and upper class. More than 35 per cent of its population was in the middle- and high-income brackets in 2011, according to a 2015 report from the Pew Research Center. While the middle-class cohort has shrunk, the relaxation of sanctions is expected to boost economic growth and subsequently improve the fortunes of Iranian families.
Labor Force
Unemployment remains elevated and is expected to be a central challenge for the government. According to the Statistics Center of Iran, the unemployment rate was estimated at 10.3% in 2013. Unofficial sources, however, estimate the overall unemployment rate to be as high as 20%. The unemployment rate is particularly worrisome among women, the female (20.3%) and the youth population (24%). The incidence of underemployment has also become highly prevalent. The weakness seen in the labor market comes within a context in which only 36.7% of the population is economically active.
Iran's Capital Market
The Bourse Council
The Bourse Council is the highest authority and is responsible for all related policies, market strategies, and the market supervision in Iran. The Chairman of the Council is the Minister of Finance and Economic Affairs; other members are: Minister of Trades, Governor of the Central Bank of Iran, Managing Director of Chamber of Commerce, Managing Director of Chamber of cooperative, Attorney General, Chairman of the Securities and Exchange Organization, representative of active market associations, three financial experts on proposal of the Economics Minister and approval of the Council of Ministers, and one representative for each commodity exchange.
The Securities and Exchange Organization (SEO)
The SEO is in charge of administration and supervisory duties governed by the Board of Directors. The SEO’s Board of Directors are elected by the Securities and Exchange Council. SEO is the only regulatory body for the regulation and development of the capital market in Iran.
Central Securities Depository of Iran (CSDI)
The CSDI was established due to the market law of the Islamic Republic of Iran in terms of registration, custody, and transfer of securities ownership, and clearing and settlement of securities as well. CSDI is a public joint stock company which is owned by the Securities & Exchange Organization, Banks, Brokers and private sectors. Decisions made in general assembly requires the approval of Securities & Exchange Organization in order to be valid.
Tehran Securities Exchange Technology Management Co. (TSETMC)
The Tehran Securities Exchange Technology Management Company (Corporation) was registered on 1st June 1994..TSETMC Provides specialized technical services with respect to the processing of financial economics data and information; computer applications such as hardware, software, networks; and implementation and optimization of operational, managerial and computerized approaches of trading securities, commodities and financial instruments.
Tehran Stock Exchange (TSE)
Opened in 1967 and so far the largest stock exchange in Iran. The TSE is located in Tehran and is a founding member of the Federation of Euro-Asian Stock Exchanges, which has been one of the world’s best performing stock exchanges in the years 2002 through 2013. TSE is considered as a “frontier” market. In comparison to other regional markets, the most significant advantage of Iran’s capital market is presence of 40 industries listed in the exchange.
Industries such as the automotive, telecommunications, agriculture, petrochemical, mining, steel iron, copper, banking and insurance, financial mediation and others trade shares at the stock market which makes it distinctive in the Middle East. The second advantage is that most of the state-owned firms are being transferred to the pubic under the general policies of article 44 in the Iranian constitution. The TSE is open for trading five days a week from Saturday to Wednesday, excluding public holidays. Trades are being executed through the Automated Trade Execution System from (8:30 am Pre-market) 9 am to 12:30 noon, which is integrated with a clearing, settlement, depository and registry system. Settlement is T+3.The TSE is solely an order-driven market and all transactions are performed under the ethical conducts of open auction.
Iran Fara Bourse (IFB)
The Iran Fara Bourse is a market for securities and other financial instruments. Its transactions officially started in four market sections including First Market, Second Market, Third Market and New Financial Instruments Market on September 28, 2009. In order to provide more facilities for smaller industrial companies, IFB provides an easier listing process in comparison to Tehran Stock Exchange (TSE).IFB was created for the purpose of financing manufacturing and service companies by facilitating the process of listing. The main goal of IFB is to boost and strengthen the national economy through production by focusing on the capital market features of financing projects and redistribution of projects’ income.
Products
- Equity
- Sukuk (Murabaha, Ijara, Musharaka)
- Housing Mortgage Right (HMR)
- Exchange Traded Fund (ETF)
- Exchange Traded Project Fund (ETPF)
- Fixed Income Bond
Iran Mercantile Exchange
The Iran Mercantile Exchange was established on September 20, 2007, following the merger of the agricultural and metal exchanges of Tehran. The merger started a new chapter in Iran capital market providing unlimited trading opportunities for the investors inside and outside of the country.
Iran Energy Exchange
Iran is a major oil and gas producing country holding the world’s largest known reserves of hydrocarbon resources. Well-endowed with huge energy resources in the world, Iran deserves to have one of the world’s largest energy exchanges. Establishment of Energy Exchange would develop the Iranian energy market leaving positive impacts on the country’s overall economy as well. Energy exchange contains three different markets including physical, derivative, and secondary markets. Each of these markets hold both domestic and international rings. The physical market lists electricity, oil and gas, and other energy carriers. The derivatives market includes standard parallel futures contract, futures contract, and options contract.