Washington, D.C., December 5, 2014 - The stakes for Iran's economic future remain high as negotiators extend the deadline on talks around its nuclear program, according to a new report by the Institute of International Finance.

"Recent sanctions have inflicted heavy damage on Iran's economy," said George Abed, senior counselor and director of Africa and the Middle East at the IIF. " broad interim agreement could allow Iran to resume global trade and develop its huge energy resources, unleashing economic growth. The economic consequences of a possible agreement, however, must be gauged against the internal political dynamics in Iran and the United States. Opposition forces in Iran have so far remained quiet while negotiations proceed, but they have not given their full consent. The U.S. Congress has also pressured the Obama administration to maintain, and even strengthen, the current sanctions regime on Iran. Any agreement would see a gradual easing of sanctions, with a delay to start, so that Iran can demonstrate its commitment to live up to its obligations under the agreement."

Real GDP contracted by 6.6 percent in FY2012/13 and by two percent in FY2013/14. If a broad interim agreement is reached, Iran could see GDP growth of five and six percent in fiscal years 2015/16 and 2016/17, respectively.

"Current low oil prices will put additional strains on Iran's economy, especially since Iran's fiscal breakeven price of oil is $148 per barrel. These pressures could make a nuclear deal more likely by the June 2015 deadline," said Garbis Iradian, deputy director of Africa and the Middle East at the IIF. "With an agreement, foreign direct investment into the energy sector, long starved for investment and technical knowhow, could return and eventually help Iran raise oil production, potentially beyond pre-sanctions levels. Without an agreement, the Iranian economy would likely weaken further and unemployment would continue to rise."

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The Institute of International Finance is the global association of the financial industry, with close to 500 members from 70 countries. Its mission is to support the financial industry in the prudent management of risks; to develop sound industry practices; and to advocate for regulatory, financial and economic policies that are in the broad interests of its members and foster global financial stability and sustainable economic growth. Within its membership IIF counts commercial and investment banks, asset managers, insurance companies, sovereign wealth funds, hedge funds, central banks and development banks. For more information visit www.iif.com.'