As the world is anticipating the conclusion of the nuclear negotiations between Iran and the five permanent members of the UN Security Council plus Germany (P5+1), analysts and businesses wonder how a potential lifting of the current sanctions will influence economic developments in Iran. There is no doubt that a gradual lifting of sanctions will pave the way for greater trade and investment ties between Iran and the rest of the world, especially the Western nations. However, what exactly can we expect beyond a comprehensive deal?

This analysis focuses on the economic developments and refrains from any scenario analysis on a political level, especially since there are major domestic, regional and foreign policy complexities in the political sphere.

Economically, if a deal is agreed upon by Nov. 24, one needs to assess short-term and medium- to long-term effects on the Iranian economy, especially as the eventual sanctions relief will be a medium-term process tied to a number of actions on the Iranian side. As such, there will be short-term psychological impacts and then medium-term practical impacts.

The short-term effect of a positive outcome will be a huge psychological boost for key economic actors in Iran. It will generate a momentum in the Iranian economy and consolidate the growth path that the government of President Hassan Rouhani has set in motion, potentially leading to 5% economic growth in 2015. Furthermore, there will be a huge push for imports of Western goods and services, especially to fill the gaps that have been generated through past sanctions. Evidently, a huge push for imports will also require major solutions for trade financing, though the release of Iran’s own financial assets abroad will help finance the increased imports.