Sanctions on Iran Lifted; Luxury Brand Boom on Horizon

Finance and Trade
17/01/2016 18:11

The United States and European nations lifted oil and financial sanctions on Iran and released roughly $100 billion of its assets after international inspectors concluded that the country had followed through on promises to dismantle large sections of its nuclear program. Nuclear sanctions have been in place since 2006, while other sanctions stretch back decades. The announcement came after days and weeks of secret high-level diplomacy - particularly by American Secretary of State John Kerry - and the release of long-held prisoners on both sides. Iranian President Hassan Rouhani said that the lifting of sanctions was "a turning point" for Iran's economy, adding that the country needed to be less reliant on oil revenues. 

Since the deal was first signed in July 2015, there has been rampant speculation on the impact it will have on the Iranian economy. BBC News ran an article back in June, "Why a luxury-shopping revolution is coming to Iran", noting that, "After decades of austerity following the Islamic Revolution, middle-class Iranians have developed a taste for high-end designer goods, and for Tehran's young rich, shopping has become the new religion." Luxury Society ran a similar article last August, "The Untapped Potential Of Iran For Luxury Goods Brands", stating that, "Iran is quickly developing into one of the fastest-emerging luxury travel destinations in the world and – combined with the rising rate of disposable income of its population and positive political developments in the pipeline – it could become the next lucrative hotspot."

Matthew Dixon of Luxury Society concludes the following: "The opportunity in Iran for luxury brands becomes particularly attractive when you look at the disposable income of its population. Despite years of sanctions, the International Monetary Fund puts Iran’s per capita GDP at $16,500. Put into context, this is more than China, India and Brazil. It is this figure which means the opportunity in Iran is being so carefully monitored. Under current sanctions, it is not illegal for Western luxury brands to sell their products in Iran. However getting any profits out of the country is very challenging. If, as expected, a compromise is reached between President Rouhani and Western leaders and the economic sanctions relaxed, the massive potential of Iran as a credible and lucrative luxury goods market will undoubtedly be realised." That day has come.