IMF, World Bank foresee better economic performance by Jordan, differ on rates

AMMAN – The International Monetary Fund (IMF) and the World Bank have given different outlooks for Jordan’s economy, with the former foreseeing a brighter economic future for Jordan. 

In their recent reports on world economic outlook released during the IMF-World Bank annual meetings held in Washington DC between October 7 and 9, the IMF projected Jordan's gross domestic product (GDP) to grow by 2.8 per cent in 2016 and 3.3 per cent in 2017, while the World Bank said the Kingdom’s economic growth is expected to remain flat at 2.3 per cent this year, 2.7 per cent in 2017 and improve in the medium term to 3.1 per cent in 2018. 

Both of the international financial organisations blamed spillovers of regional conflicts for the slowdown in economic growth in Jordan, with the World Bank saying that the projected growth rates in the medium term are still below Jordan’s potential. 

Assuming no further deterioration of security spillovers in and around Jordan, the World Bank said confidence in the macroeconomic framework is forecast to strengthen due to the recently approved Extended Fund Facility agreement between Jordan and the IMF. 

The bank’s report said that pressures on the external account are expected to subdue as of 2017 with a pickup in exports and investment, due to diversification efforts and the opportunities afforded by simplifying the EU’s rules of origin and energy supply diversification plans, as well as stabilisation of remittances and travel receipts. 

Despite expectations of higher oil prices and resulting higher energy imports, Jordan’s current account deficit is expected to narrow as of 2017, according to the World Bank. 

With regard to risks and challenges that may face the Kingdom’s economy, the bank said regional instability could still influence consumer and investor confidence. 

The report urged speedy implementation of planned reforms related to the labour market. Improving the investment climate and unlocking access to finance are vital for stimulating economic activity and improving welfare, the report added. 

Finally, the report said that Jordan’s external position would face further pressure if expected grants and concessional financing do not materialise.