Economy’s first quarter figures

The table of the gross domestic product (GDP) for the first quarter of this year, just issued by the Department of Statistics, reveals a basic growth rate of 4.8 per cent in current prices, 2.5 per cent in constant prices.

Net taxes on products did not increase at the same rate as the general economic growth. The GDP growth rate in fixed prices was only 2.3 per cent. This is supposed to be the real economic growth rate.

Taking into consideration the troubles in the region and the pessimistic projections, including the claim by some that due to the negative readings of most economic indicators, the economy may not grow this year at any rate, one can conclude that a growth of 2.3 per cent is not bad.

Of course, the above-mentioned growth, low as it may be, did not happen exclusively in the first quarter of 2016; it actually happened over a full year, beginning with the second quarter of 2015, an indication that the outcome serves as a very small indicator of growth in 2016.

The above-mentioned figures and rates depicting growth in current as well as in fixed prices indicate that the inflation rate (deflator) calculated for all components of the GDP is around 2.2 per cent.

It is not negative, as shown by the consumer inflation rate. It is almost the same as the core inflation rate that excluded the effect of cheaper fuel and the seasonal fluctuation of agricultural produce.

The GDP components show that services contribute around 70 per cent of the GDP. They are responsible for 75 per cent of the growth achieved in the period under consideration, another indication that Jordan’s economy is essentially service oriented; services are able to grow faster than material production.

One cannot ignore the fact that the mining sector — potash and phosphate — the so-called Jordan’s petroleum, registered very bad results.

Growth of this vital sector was negative by 8 per cent. It reduced the overall growth of the economy by one-seventh of one percentage point.

The government may have to look into this alarming result to identify the reasons and do something about the situation.

The public, in general, and the shareholders, in particular, should know whether this is a management failure or due to external circumstances that are not under anybody’s control.

A pleasant surprise regarding the GDP statistics this quarter is that the agricultural sector, not a dynamic sector, was able to raise its contribution to the GDP to 3.6 per cent, which is higher than the usually meagre contribution of the sector.

The GDP table for the first quarter of this year shows that the manufacturing industry registered a growth rate of 1.2 per cent in current prices and almost 1 per cent in fixed prices.

This outcome does not fit with the monthly statistics showing the manufacturing industry producing less output and selling at lower prices, year-on-year.

The Department of Statistics may like to reconcile its negative monthly results with this positive quarterly result of the same sector.

The end result is that slow economic performance from the past 5 years is still with us. Economic recovery has not happened yet.