ADHERING so far to the terms of its nuclear deal, Iran is now busy taking most of its uranium centrifuges out of operation. That is a bitter pill for a regime that invested so much prestige in its atomic programme, but the only way to escape economic sanctions. Optimists hope that if Iran can trade more freely with the outside world, living standards will rise; investors hope for fat profits. In leafy north Tehran, Iranians back from America’s west coast and eager young foreign fund managers discuss possible ventures over sushi. No one doubts that Iran has potential. With almost 80m people, it is the world’s 17th-most-populous market; and many Iranians lack even basic goods. The country has competent farmers, carmakers, drug firms and a fairly sophisticated service sector, making it less dependent on oil, now at rock-bottom prices, than other big producers such as Iraq and the Gulf states. The government’s target of 8% growth over the next five years is less unrealistic than many rivals’ five-year plans. Economists talk of Iran being able to imitate Turkey’s transformation in the late 1990s.

But by itself, sanctions relief will not transform the ailing economy. There are deep underlying problems, says Mohammad Khoshchehreh, a professor at Tehran University and a former economic adviser to Mahmoud Ahmadinejad (the former president), who now criticises his old boss. “Sanctions are just part of it; there is a history of mismanagement, too,” he says.

Today Iran’s most pressing problems include double-digit inflation, slow growth, low productivity and a stubbornly high unemployment rate of 10.6%. Joblessness is even worse among women, the young and urbanites. Hassan Rohani, the president, inherited these problems from his predecessor, Mr Ahmadinejad, and has improved things somewhat. His election stoked confidence and he has returned to more orthodox economic policies, for example by spending less extravagantly than Mr Ahmadinejad.

Growth rebounded to 4.3% in 2014, a big improvement on the 6.6% contraction in 2012. Mr Rohani scrapped a populist housing programme, under which poor people were given free land to build on and the central bank printed money to provide them with mortgages. Inflation has duly fallen from around 40% to under 20%. But these are still modest achievements. Growth is expected to stall again, thanks to low oil prices, and unemployment is rising. The flabby state sector needs a lot more trimming, and the private sector yearns to be unleashed.

Sasan Rahnema, an Iranian businessman who returned from America in 2005, says there are more firms in Iran worth putting money into; he calls it a “cool situation”. But most investors are still tentative. They may risk small sums in online start-ups that mimic successful foreign ideas, but they are not yet building big, expensive factories. Mr Rahnema has invested in Cafe Bazaar, an app store for Iran, and Divar, a classified-advertising site.