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Scarred by regional conflict, Jordan’s economy carried on — experts

By JT - Jun 08,2019 - Last updated at Jun 08,2019

His Majesty King Abdullah inaugurates the chemicals plant for Oncology Active Pharmaceutical Ingredients of Al Hikma Pharmaceuticals, in September 2014 (Photo courtesy of Royal Court)

AMMAN — Jordan’s economy has witnessed several achievements over the past 20 years and in spite of regional developments and an influx of refugees, it has remained resilient and advanced on several fronts, according to experts.

In the last two decades, Jordan’s gross domestic product (GDP) grew more than its population growth rate, at an average of 6.5 per cent, which reflected positively on per capita income. Per capita income increased by 48.7 per cent between 1999 and 2009, and continued growing from JD1,177 in 1998, to JD2,830 in 2017.

The size of public debt was moderate in 2009, and sat at 55 per cent of the economy’s total size. The prolonged expansion was largely export-led, with total exports and services tripling during that period.  Jordan’s exports have increased from $1.8 million in 1999, to $7.5 billion in 2017.

According to economists and experts interviewed by The Jordan Times, His Majesty contributed significantly to these achievements by encouraging industry and trade, and by forging strong bilateral and international relations, which contributed towards a continuous flow of Foreign Direct Investment (FDI), which averaged 13 per cent of the GDP during 2003-2009.

The progress halted after the global financial crisis in 2008-2009, predominantly due to a series of exogenous shocks that might have derailed any other country into economic recession and social upheaval. However, Jordan and its people, guided by His Majesty, succeeded in maintaining a positive, albeit moderate, rate of GDP growth.

According to official figures, Jordan’s FDI fell from an average of 13 per cent to just 5.1 per cent of GDP during 2010-2017. It has grown from $913 million in 1999, to $2 billion in 2017.

His Majesty King Abdullah played a key role in promoting investment opportunities in the Kingdom’s various sectors, economist Wajdi Makhamreh said in a recent interview with The Jordan Times.

“His Majesty has been always keen on promoting the opening of new markets for Jordanian industries… in his discussions with all world leaders, the King always refers to potential investment opportunities and promotes increased trade cooperation,” the economist said.

“His Majesty has done his part and boosting trade ties always features high on his agenda, but stronger follow-ups by concerned public authorities is needed to achieve better results,” Makhamreh said.

Economist Mazen Marji made similar remarks. “Since his Accession to the Throne, His Majesty has been always keen on meeting with CEOs of international and world-renowned companies where he highlighted potential business opportunities,” Marji said.

His Majesty has constantly issued directives to the government authorities to protect investors and make it easier for investors to do business, he added.

“King Abdullah exerted tremendous efforts in boosting trade ties and helping trigger economic growth and the King is accompanied during various visits across the world by representatives from the private sector to open the room for exploring joint business opportunities... The King is a strong supporter of start-ups and entrepreneurs,” said Marji.

According to official figures obtained by The Jordan Times, Jordan, over the past two decades, has largely succeeded in maintaining a moderate rate of inflation.

The annual inflation rate during the first decade hovered around 4 per cent, despite a sharp rise in energy and food prices in global markets since 2008.

Conflict and instability in the region and in neighbouring countries led to reduced demand from key export markets and cut off important trade routes. Between 2014 and 2016, exports plummeted by 13 per cent as trade with and through Iraq and Syria collapsed.

Iraq stopped subsidising its oil shipments in 2004 and the Egyptian natural gas pipeline suffered numerous disruptions in 2011, forcing Jordan to import expensive liquid fuels during a time of record prices, further pressuring the country and adding $5 billion to Jordan’s (at the time) moderate level of debt.

Jordan’s part in hosting refugees and migrants from neighbouring countries resulted in a net population increase of 50.4 per cent between 2008 and 2017. The international community, in recognising Jordanians’ commitment to serving a global public good, supported the Kingdom.

Jordan’s ranking in international reports has also advanced on different fronts. In terms of competitiveness, Jordan ranked 73rd out of 140 countries in the Global Competitiveness Index 2018, doing well in the categories of institutions and financial system, infrastructure, technological readiness, health and human resource skills.

In addition, the 2018 World Competitiveness Report by the International Competitiveness Centre of the International Institute for Administrative Development in Lausanne, Switzerland, showed Jordan had made significant improvements in the adoption of digitisation, ranking the Kingdom as 45th in the world.

Moreover, since the launch of the Global Talents Competitiveness Index in 2013, Jordan has steadily advanced in terms of score and global rating. In the latest 2018 index, Jordan ranked 50th out of 119 countries around the world.

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