Foreign investment fell by third last year (that’s all!)

June 28, 2019

Foreign investment in Iran fell by almost a third last year after jumping by almost half the previous year to reach by far the most foreign investment in Iran in any year, according the annual report on such investments around the world by UNCTAD, the UN Conference on Trade and Development.

UNCTAD reported that foreign direct investment (FDI) in Iran in 2018 totaled $3.48 billion, the sixth best year for Iran attracting foreign investment.  But FDI in 2018 was down 31 percent from 2017.

UNCTAD reported that foreign direct investment in Iran in 2017 totaled $5.02 billion, up 49 percent from the investment total of $3,372 million in 2016 and an immense 2-1/2 times the $2,050 million recorded in 2015, the last year before most sanctions were lifted.

As the accompanying chart shows, foreign direct investment in the Islamic Republic was a mere pittance until the Khatami Administration was able to attract foreign capital, bringing in $3,519 million in 2002.  But Iran did not surpass that volume until 2010, 2011 and 2012—ironically under President Ahmadi-nejad.  Foreign investment then plummeted after the EU joined the United States in imposing punitive sanctions in the summer of 2012.

The record set in 2017 is not likely to be surpassed any time soon due to President Trump’s re-imposition of US sanctions, which has driven away many firms—especially major international firms—that had been planning to invest—or that had already invested—in Iran.

The $5 billion invested in Iran in 2017 was impressive by Iran’s historical standards.  But it still was not that impressive by global standards.  A total of 39 countries attracted more foreign investment than Iran that year.

Furthermore, the total FDI in Iran in 2018 amounted to a mere 0.3 percent of global FDI, making Iran an insignificant investment locale.

The accompanying chart shows the figures published by UNCTAD last month going back 23 years.