A new understanding between Iran and the United States has renewed expectations for a recovery in industrial investment. Yet economists and business leaders caution that any meaningful impact on production and capital formation is unlikely to emerge quickly. The experience of the 2015 nuclear deal suggests that political agreements can improve sentiment and create opportunities, but translating those opportunities into factories, equipment and new industrial capacity takes time.
The main challenge is uncertainty. The extent of sanctions relief, the release of frozen assets and the future of foreign investment remain unclear. As a result, businesses are watching closely before making long-term commitments.
According to economist Farshad Fatemi, it is still too early to estimate the economic consequences of the new understanding because many of its practical details have yet to be clarified. “The scope of sanctions relief, the release of foreign-exchange resources and the possibility of attracting foreign investment are all decisive factors whose final outcome remains uncertain,” he said.
Fatemi noted that industrial investors are paying close attention to the quality of sanctions relief, the availability of foreign currency and the overall improvement of the business environment. While progress in these areas could encourage investment, he stressed that industrial projects require planning, financing and implementation periods that naturally delay visible results.
From Deal to Investment
The experience of the 2015 nuclear agreement highlights this reality. Although optimism surged following the deal, the strongest signs of increased industrial investment appeared several years later. Decisions made in the early post-deal period only gradually translated into capital formation as companies moved through financing, procurement and construction stages.
Economist Jafar Kheirkhahan believes the outlook for industrial investment can be divided into three possible scenarios. In the most optimistic case, a comprehensive and durable agreement leads to broader economic normalization and a gradual return of international investors. Under such conditions, industrial investment growth could reach 5% to 8% annually over the coming years.
“The most likely outcome is a middle scenario,” he said. In this case, a more limited agreement would encourage some foreign investment, particularly from countries such as China and Russia, while industrial investment growth would remain modest at around 1% to 3% a year.
Kheirkhahan argued that the legacy of the US withdrawal from the 2015 agreement continues to influence investor behavior. Many international companies now place greater importance on legal guarantees and the long-term durability of any new arrangement before committing capital.
He also pointed to additional challenges, including aging industrial infrastructure, high inflation, elevated financing costs and energy shortages. These factors, he said, could reduce the speed at which any diplomatic breakthrough translates into industrial expansion.
From Potential to Production
Despite the obstacles, representatives of the private sector see significant room for growth. Arya Sadegh-Niat Haqiqi, head of the Industries Commission at the Iran Chamber of Commerce, said years of sanctions have left substantial unused capacity across the economy.
“If restrictions on international economic relations are reduced, new opportunities for production, industry and trade will emerge,” he said. Lower costs, easier access to foreign markets and improved business conditions could help activate idle industrial capacity and encourage new investment projects.
Business leaders argue that domestic demand remains one of the most important issues facing private industry. Alireza Kolahi, a member of the Iran Chamber of Commerce, described weak demand as the principal challenge for many manufacturers.
“Today’s industrial crisis is concentrated in private-sector and downstream industries, which account for roughly 70% of industrial employment but face serious demand shortages,” he said.
According to Kolahi, export-oriented commodity industries such as petrochemicals and steel have been able to maintain sales despite sanctions. Producers of finished goods, however, remain heavily dependent on domestic demand and have suffered from declining purchasing power and lower investment levels.
Industry representatives also stress that any economic opening should be used to strengthen production rather than fuel imports of consumer goods. Ahmad Mokhtar, vice chairman of the Industries Commission at the Iran Chamber of Commerce, argued that policymakers should prioritize industrial modernization and technology transfer.
“Any reduction in external restrictions should serve domestic production, industrial infrastructure and the supply of capital and intermediate goods,” he said.
He added that international partnerships could help improve productivity, competitiveness and technological capabilities throughout Iranian industry.
Beyond the immediate effects of sanctions relief, some analysts believe Iran’s long-term success depends on a broader economic strategy. Economist Hamid Azarmand argues that international agreements are only one part of the development equation. In his view, sustainable growth requires a clearer vision for integrating Iran into regional and global value chains through targeted foreign investment, logistics development and expanded trade partnerships.
The emerging consensus among economists and business leaders is that a new understanding could create valuable opportunities for industrial growth. Yet the agreement itself is unlikely to be enough. Lasting progress will depend on policy consistency, stronger institutions and reforms that make investment more predictable. If those conditions are met, Iran’s industrial sector could gradually move from years of stagnation toward a more dynamic and competitive future.
