Abstract
The coming year will be a tough one for Iran. Economic growth will slow,
mirroring the slowdown in all
the major economies of the world, and we now
see real GDP growth in 2009-2010 (note: Iranian years
begin in March)
falling to just 2.4%, down from 4.7% in 2008/09. While we are not expecting
Iran to fall
into recession, our projected growth rate would be the most
lacklustre in a decade. Thereafter, growth will
begin to pick up again, in
line with a slow recovery in the global economy, and over the course of
the
forecast period (2009/10 to 2013/14) we expect growth to average 3.6%.
This is substantially below an
estimated 5.6% average growth rate over the
previous five years, when economic expansion was driven in
large part by
the oil boom.
Although Iran may be relatively isolated in diplomatic
terms, the theory of a decoupled, developed and
developing world is
increasingly being shown to be wishful thinking and we do not believe that
the
Islamic Republic will be able to hide from the gathering global
headwinds. Indeed, as the world' s fourth
largest oil producer, with crude
sales making up over 80% of total export revenues, Iran' s economic
health
is intrinsically tied to the state of the global economy.
We also see
gross fixed capital formation growth slowing to 2.5% in 2009/10, down from
over 6% the
previous two years. As regards the crucial hydrocarbon sector,
we expect that much-needed investment
will remain subdued until the oil
market recovers. In addition, foreign investment into the hydrocarbon
sector is likely to remain muted as long as Iran faces international
sanctions.
On a more positive note, it appears that inflationary pressures
are finally easing.
The global financial crisis is likely to affect the
various segments of the global insurance industry in
different ways. In
many countries, especially in Europe, the coming recession points to softness
in the
non-life segment. In many cases, numbers of policies may fall and
there should be downwards pressure
on premiums. By contrast, the main
problem for the life segment in almost every country is the extreme
volatility of financial markets. Over the longer term however, the fortunes of
life insurance will likely
recover thanks to the secular growth of
organised savings in most countries. China - where the larger
insurance
companies continue to achieve double digit growth in premium income - is a
good example of
this. Some particular niches should also do well in the
current environment, such as legal liability
insurance.
In the Middle
East and North Africa, we profile 17 companies. These are AGF, AIG, Allianz,
Aviva,
AXA, Cardif, ERGO, Eureko, Fortis, Generali, Groupama, HSBC
Insurance, Liberty Mutual,
MAPFRE, RSA, UNIQA and Zurich Financial
Services. We also look at a number of the smaller local
firms that are
active in the region, particularly in Kuwait, Oman, Saudi Arabia and the
UAE.
We also discuss the regional presence of Belgium’s KBC and
Austria’s Erste Bank through a number of
insurance subsidiaries and
explain the importance, for each of the various countries, of purely
domestic
firms.
BMI' s Insurance Business Environment Rating for Iran
is 34.6
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