The economy-wide positive impact of the JCPOA since January 2016 is proving to be slower than expected. Iran’s economy moderated to an estimated annual growth rate of 0.6 percent in 2015 ahead of the implementation of the Joint Comprehensive Plan of Action (JCPOA). Following the removal of nuclear-related sanctions in January 2016, the growth rate is projected to average 4.5 percent in 2016–2018, up from a 0.5 percent average in 2013–2015. Thisprojected recovery which will rely on favorable external factors, is expected to be driven by (i) a significant increase in energy sector activity thanks to the removal of sanctions; (ii) increased inflows of foreigninvestment; and (iii) lower trade and financing costs that will help the non-oil sector contribute significantlyto overall growth and job creation. However, there are significant downsiderisks to Iran’s medium-term outlook. While the January 2016 lifting of the nuclear-related sanctions is expected to reveal the dynamism of the Iranian economy, a large structural reform agenda remains key in moving towards the ambitious growth target under the 6th five year development plan. The plan envisages the implementation of reforms of state-owned enterprises, the financial and banking sector, and a greater emphasis on the allocation and management of oil revenues to productive investments among the main priorities of the government during the five-year period.