JSF paper sheds light on economic forecasts for MENA region

AMMAN — The Jordan Strategy Forum (JSF) on Sunday issued a summary paper titled, “Economic Forecasts for the Region Next Year”, to shed light on the expected economic prospects in Jordan and the region in 2024, based on a report issued by the International Monetary Fund (IMF). 

The JSF also referred to a recently published article by Bloomberg (Wider War in Middle East Could Tip the World Economy Into Recession), which presented three scenarios for global economic growth in light of current developments, the Jordan News Agency, Petra, reported.

At the beginning of October 2023 the IMF issued its periodic report on the World Economic Outlook, the paper said. This report outlined the prospects for the global economy focusing on the most important economic policy issues and their expected prospects in major groups of countries.

The IMF reported some economic forecasts for the Middle East and North African region including a 2 per cent decrease in real GDP growth for 2023, a downgrade of 1.1 percentage points from the last JSF projection in April, the paper said.

However, it is likely that growth in the region will accelerate to 3.4 per cent in 2024 if some of the current economic and political factors and conditions disappear, the paper said, citing the IMF report.

The report added that persistent structural hurdles will constrain growth over the forecast horizon. Growth is not forecast to be strong or inclusive enough to create jobs for the 100 million Arab youth who will reach working age over the next 10 years.

As far as Jordan is concerned, the report, based on various macroeconomic indicators, showed that the expected performance of the economy is moving in the “right direction”.

The report expected real GDP growth for the Kingdom to increase to 2.7 per cent in 2024, up from 2.6 per cent in 2023, and expected the core inflation to drop to 2.5 per cent next year, down from 3.3 per cent in 2023. 

The report also projected the general government fiscal balance  (per cent of GDP) in 2024 to stand at -6.6 per cent, compared with -7 per cent in 2023, and the total government gross debt (per cent of GDP) to go down from 93.8 per cent in 2023 to 91.9 per cent in 2024. 

The report’s expectations indicate that developments in Jordan will be more stable, where growth is projected to remain stable or accelerate because of “strong tourism and exports”.

Price pressure in Jordan is projected to continue declining, with inflation nearing pre-pandemic levels this year.

Jordan’s previous efforts to liberalise trade and engage the private sector have effectively stimulated economic activity and growth, the report said.

However, and as stated in a recently published article by Bloomberg (Wider War in Middle East Could Tip the World Economy into Recession), the onslaught of Israel on Gaza “has the potential to disrupt the world economy and even tip it into recession if more countries are drawn in”. 

If a direct war breaks out, the global GDP growth rate will fall from around 2.7 per cent to around 1.7 per cent, the report said. In a confined war, the global output will likely decrease by 0.3 points than previously expected.

The JSF said that with the recent events in the region, and their expected impact on the global economy as stated in Bloomberg analyses, the IMF’s expectations about the economic prospects in the region will likely be downgraded.

The forum added that the Jordanian economy will also not be immune to global and regional economic pressures, given its sensitive geographical location, its close connection to the region’s economies, global oil prices and expectations of a decline in tourism.