Country risk in Iran is high with an OECD country credit grade of 6. This is akin to a speculative grade sovereign rating, which indicates a high likelihood that Iran will be unable and/or unwilling to meet its external debt obligations. The reintroduction of US sanctions will weigh heavily on oil receipts, a major source of foreign exchange.
The World Bank gives Iran an ease of doing business rank of 128 out of 190 countries. It outperforms the region on trading across borders, enforcing contracts, getting credit, registering property and dealing with construction permits. But lags in all other areas, performing particularly poorly in protecting minority investors and starting a business.
Risk of expropriation in Iran is high. The Iranian revolution in 1979 and the incoming regime led to widespread expropriation of foreign owned assets and businesses. This aligns with the poor scores from the ease of doing business scorecard. The deteriorating economic climate and ailing government finances raises the risk of expropriation as governments look at other sources of revenue.
Political risk in Iran is elevated, largely due to US sanctions, high poverty rates and high inflation. This leads to considerable political risk, as such circumstances have led in the past to hardliner reactionaries taking government, a herald for further economic deterioration with a rollback of liberalising reforms expected. Iran scores poorly on the World Bank’s governance indicators. It is in the bottom quartile on most measures and scores particularly poorly on regulatory quality and ‘voice and accountability’. Government mismanagement, inefficiencies and a burdensome regulatory environment are drawbacks