Restoring investor confidence need of the hour — economists

AMMAN — Forecasts by economists paint the same COVID-19 gloom for the Kingdom, as the national economy continues to suffer contraction, predicting various scenarios for how the post-coronavirus economy might play out.

“If the national economy recovers by 50 per cent following further easing of restrictions, this would be positive,” economist Mazen Marji told The Jordan Times in a phone interview on Sunday.

The outlook for Jordan’s economic recovery has certain criteria and has to wait for the further easing of pandemic control measures, in addition to curbing the spread of the virus in Jordan “which is no longer a cause for having economic difficulties given Jordan’s swift response”, Marji said.

The Kingdom’s economy has suffered from “fixed fundamental problems” before the ongoing crisis and what has changed is that “things got worse and the fact that the pandemic exposed all the pre-existing cracks in Jordan’s economic direction”, he added.

Unemployment, poverty and debt will increase, resulting in severe economic recession, difficulties in managing public finance and a widening trade and budget deficit, Marji said.

“There are no fixed numbers reflecting the current situation in which expenses exceeded tremendously and revenues flatlined amid the pandemic,” added Marji. 

The government’s physical distancing measures to curb the outbreak have weakened buying power, which is essential to the economy.

“Next year’s budget is largely dependent on foreign aid and the laying off large numbers of employees. What stands out is lack of confidence in the Kingdoms’s economic outlook,” Marji noted.

Restoring investor confidence to promote higher investment levels in the Kingdom, as well as, attracting not only foreign investors, but also local investors are of great importance, in order to recover, Marji said, adding that nothing is certain worldwide, but “we need to focus more on the economic implications of the pandemic”.

According to the economist, the government needs to include everyone in the context of a social security and unemployment fund, especially daily wagers, with fair share payment that would allow them to also have health and unemployment insurance.

Jordan should also have some sort of a government-subsidised export consortium, which would bring together all of the national exporters from different sectors together in one place, he said, so as to market exportable goods, facilitate export procedures, examine product trends depending on the importing country and further develop Jordan’s export strategy.

Economist Husam Ayesh told The Jordan Times that Jordan’s economy is currently unable to thrive, whereas at the first sign of a crisis is the one that is massively affected and struggles to adapt. 

“The overall growth rate of small- and medium-sized enterprises is unable to create new job opportunities, therefore what we need is genuine economic performance,” Ayesh said.

“The world now is re-examining major concepts and approaches, people started to head towards globalisation and it is time for a country like Jordan which depends on international aid to fix deeply rooted economic problems that have lasted for more than 30 years,” Ayesh noted.

Jordan’s imports are three times more than its exports, its economic development is almost negligible and the policies and regulations are ever-changing, therefore there should be major changes in economic paradigms, he added.

“Predicting the strength of economic recoveries is crucial during this gloomy and uncertain situation, for it helps countries have holistic reviews on all case scenarios to be prepared,” he said.

Economist Wajdi Makhamreh said that Jordan’s economy will need time to recover given that the pandemic has had long-term adverse effects, adding that any economy needs a surge in local and international investments during the recovery phase, gearing towards increasing people’s opportunities in the local market, as well as, having an inclusive rebound.

“The government should decrease taxes rates and to do that it should fill all the missing gaps in the Kingdom’s sectors,” Makhamreh told the Jordan Times over the phone.