Economists at Bank of America Merrill Lynch (BAML) have published a lengthy report on Wednesday into the Iranian economy, and the effect that the end of the relief from sanctions will have on the country.
They have got a great chart showing just how much potential growth Iran has lost out on since the revolution in in 1979. Under BAML’s “stability and no sanctions alternative” the Iranian economy could be bigger than Saudi Arabia’s, instead of about half the size, as it is now.
Here’s how it could look:
That presumption isn’t based on anything outlandish. It would require Iran’s oil-driven GDP growth since 1989 to be equal to Saudi Arabia’s, its non-oil GDP growth to be equal to the average over the past three decades, and for imports to be stable.
That scenario has passed, but it shows that there’s a huge opportunity for the country’s economy when sanctions are lifted.
Here’s a snippet from the report:
With the injection of cash and higher oil exports, the Deal would not only boost domestic economic activity, but the spill-over effects for its main trade partners could be substantial as sanctions are lifted, in our view. Given the already weak initial economic conditions, stronger oil production and sanctions relief could bring real GDP growth to 6-7% in the short-term.
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