AMMAN, December 20, 2017 ¨C To ensure financial and economic stability, Jordan needs to deepen its equitable growth and job creation reforms to enhance the efficiency of the economy and shift job creation to the private sector. Making the economy more efficient, reducing overall business costs and expanding Jordan¡¯s export revenues with new partners and higher quality products will need to be part of that agenda.
The recent economic and policy developments in the Kingdom were discussed today at the dissemination of the World Bank¡¯s Fall 2017 issue of the Jordan Economic Monitor entitled ¡°Towards Stronger External Trade Performance¡±. The event was held in Amman and was co-sponsored by the Ministry of Planning and International Cooperation.
The Monitor noted that Jordan¡¯s economic performance remains tempered in 2017 while the fiscal adjustment is in progress. Real Gross Domestic Product (GDP) growth for 2017 is expected to reach 2.1 percent. Services continue to be the principal driver of GDP growth, and these are propelled by a robust performance in tourism. Jordan¡¯s industrial sector is also expected to regain momentum. Regarding fiscal and monetary policies, authorities are taking a contractionary stance, though the year end outcomes are expected to be mixed. The positive progress on economic reforms is expected to serve as a counterbalance to the contractionary stance. In particular, Jordan has recently passed an Inspections Law which is expected to serve the business community well by reducing business costs. Similarly, the operation of Jordan¡¯s credit bureau is expected to enable the expansion of credit to the private sector.
Jordan¡¯s labor market continues to face high unemployment and low labor force participation as the economy remains in a low growth equilibrium. Unemployment averaged 18.1 percent in the first half of 2017, while labor force participation averaged 39.7 percent. Both indicators continue to reflect acute gender-based heterogeneity and youth marginalization in Jordan¡¯s labor market.
¡°One of Jordan¡¯s most pressing challenges is to transition its economy to a model that is less reliant on foreign inflows and is more competitive internationally. This requires the continuation of macroeconomic adjustment and the implementation of structural reforms (especially continuing to improve the business environment) which will allow the private sector to drive economic growth and to create good jobs. Jordan will also need to tap into new foreign markets, and improve the economy¡¯s competitiveness and attractiveness to investors,¡± said Saroj Kumar Jha, World bank Mashreq Regional Director.
¡°Economic growth rates fell to an average of 2.6% in the years following the Arab Spring (2011-2016), compared to an average of 6.6% for the years 2005-2010,¡± said Imad Fakhoury, Minister of Planning and International Cooperation.¡°This sharp decline in growth reflects the strong impact of unstable conditions and conflicts in the region on the Kingdom. Jordan is committed to the implementation of a comprehensive reform program based on increasing revenues, rationalizing current and operational spending, and increasing capital expenditure.¡±
Jordan¡¯s long-term macroeconomic vulnerability stems from sizable internal and external imbalances that generate large financing needs, which are typically met via international assistance. ¡°The reopening of trade routes with Iraq provides opportunities for improving economic prospects. However, given that current the orientation of the Jordanian economy is geared to supporting markets in the Gulf Cooperation Council, Syria and Iraq, the regional downturn will continue to affect the economy. Efforts to open new export markets are warranted.¡±, said Christos Kostopoulos, World Bank Lead Economist.
The Special Focus of the Monitor analyses Jordan¡¯s export potential. The analysis shows how Jordan can increase the value of its exports in several markets with specific diversification strategies.
