Harvesting the boom

Notwithstanding the health cost in terms of lost lives, the economic rebound after a pandemic can be significant for countries that have dealt effectively with its health and economic impact. Looking ahead, can Jordan join in the boom or recovery after the COVID-19 is dealt with sufficiently? The answer is: the potential recovery can be considerable if certain actions take place. Most importantly, economic planners in Jordan should be aware of what they need to do, not only because it is necessary to prepare for and facilitate an economic boom, but also to ensure that actions being taken during the onset of the pandemic do not dissipate the size and scope of the potential recovery.

An article in the Economist Magazine pointed out, based on the history of pandemics, that an economic boom does emerge at the end of a pandemic, and it cited positive growth predictions for several advanced economies. The recovery predictions for the smaller and less developed economies, including Jordan, according to the IMF have been less than optimistic, but that assumes a maintenance of the status quo.

There are several occurrences that will emerge after Jordan recovers from the pandemic. The first is that people will tend to want to spend more after having had their expenditure curtailed by the curfews and restrictions dictated by the government to limit the number of COVID cases.  People, as in everywhere, will also display a reckless behaviour, seek new adventures, and yes they may want to travel domestically and abroad. It is vital to maximise and facilitate opportunities to travel internally for Jordanians and work on inviting inward tourism.

The second likely occurrence is that businesses will want to expand to meet the growth in demand. It is true that most businesses in Jordan have suffered under the pandemic and the defence ordinances that were issued. The feeling of relief will drive some to want to expand. Unless this desire is met by economic decrees that enable such an expansion, the boom will be muted, and imports will rise to compensate for the growth in demand leaving domestic production behind. Worse still, they may migrate to countries that have jumped at the opportunity of creating economic recoveries and large compensatory economic booms. Lowering interest rates will enable large ticket item purchases, revive the stagnant real estate market, and increase investment (foreign and domestic) as the cost of doing business declines. These actions and others (lowering fees such as zoning fees, licensing, etc.) will enable a larger and quicker recovery.

The third happening is the technological shift and advancements that were brought about by the necessities of dealing with the pandemic. Closures have encouraged home delivery businesses, digital and virtual conferencing, and other IT platforms. 

Innovations have emerged last year to deal with the loss of workers and work stoppages; they may create new and heightened efficiencies. There should emerge a growth in such technologies and innovations. These should be encouraged to grow into more and widespread innovations, not only in supply chains but everywhere.

Jordan has been heralded as a producer of some of the best IT work forces in the region. Such a skilled labor force should en enhanced with capital formations and greater funding for startups and business expansion and/or restructuring. Otherwise, the coming boom in IT technologies would be deflated and, as in the past, the surge is dispelled and emaciated.

Moreover, this is a double edged sword, with the structural change there will be the need to deal with the new unemployment that the innovations have created.  Unless financing is availed for expanding activities, and training or retraining is provided, the unemployed will not benefit from the growth, and the unemployment rate will persist and the increase in spending will not help recover the old unemployment rates.

Another important outcome of the pandemic era is that many in the country will ask more vehemently for political reform as the pandemic has underscored existing political deficits. It is important that the political side is addressed in a convincing and stable manner. Much wisdom is required here.

I have suggested herein that for an economic boom to occur and be properly harvested, there needs to be preparations and plans that are mission-driven and fully adopted by policies, institutions and procedures in a coordinated manner. Time will tell, and one can only hope for a positive outcome.