Economic growth despite challenges

Economic growth rate in Jordan is subjected to forecasts from different local, Arab and international entities.

They take on themselves the duty of evaluating the current and future status of the economy and its likely growth rate. The end result is a variety of estimates and percentages ranging from 2 to 3 per cent.

Among those interested in rating Jordan’s economic growth are: the IMF, which suggested that the rate will be 2.8 per cent; the World Bank, which put economic growth rate at 2.2 per cent; the Arab Fund, which went along with the international institutions; Oxford Economics, which suggested 2.8 per cent; and the Ministry of Finance, which in its preliminary presentation of the 2017 draft budget estimated growth to exceed 3 per cent.

There is near consensus among all parties that the Jordanian economy will achieve a positive growth rate this year and that the rate will rise next year.

The lowest estimate of economic growth came from the World Bank, while the highest came, as expected, from the Ministry of Finance.

Finally, the Department of Statistics (DoS) entered the picture stating that the last actual growth rate in the second quarter of this year was only 1.9 per cent year-on-year.

Most estimates of growth rate are based on the assumption that positive growth is to be taken for granted. 

Experts, however, differ slightly on the rate. They assume that the future is an extension of the past, which always witnessed positive growth, albeit at various rates.

Forecasters and analysts made their judgements without going into the components of the gross domestic product (GDP) and the factors that will decide whether growth will be positive or negative.

They hardly take into consideration the status of the various sectors of the economy.

The agricultural sector, for example, is suffering due to the near closure of neighbouring markets.

The mining sector, namely phosphate and potash, is producing less and selling less at lower prices.

The manufacturing industry is in deep trouble. Production declined and prices went down.

The construction sector is all but stagnant.

The lower tourism activity has a negative impact on hotels and restaurants.

Lower expatriates remittances suppress consumption and investment.

Fewer foreign grants received by the Treasury limit the government capacity to spend and activate the markets.

Looking at the negatives affecting many leading sectors of the economy may lead to consider the possible negative growth rate of the economy in general.

It is not known how most sectors of the economy can be on the negative side while the GDP as a whole is registering a positive growth at any rate. It seems that the DoS is determined to have the economy grow despite all the difficulties and the unfavourable circumstances.

The only possible explanation of this state of affairs is that all parties are betting that most negative economic indicators mentioned above will soon change in the desired direction.

Let us hope they are right.