Q3 growth

The Department of Statistics recently announced that the economy grew by 3.1 per cent in real terms in the third quarter of 2014 relative to the same period in 2013. 

As usual, the department gave the sources of growth; reading them is extremely interesting and analysing them is even better.

The construction sector provided 0.65 per cent of the growth. The largest growth occurred in the sector that was practically dead before the full explosion of the Syrian crisis. The sector contributed 21 per cent of the growth rate (3.1 per cent) of the gross domestic product (GDP). This means that Jordanians built to accommodate their Syrian brethren.

The increase in supply should have led to a decrease in property prices, but instead, it also meant highly inflated prices when it came to apartments.

The second highest growth (0.51 per cent) came from the retail sector. 

Again, this is a sector which benefited from the growth in the population of Jordan.

Having a real increase in sales must be due to an increase in the population, otherwise there would have been a sizable inflationary pressure, which was not the case.

The third source of growth (0.39 per cent) came from the mining sector, as the two mining giants saw a slight increase in global demand (but not a return to the 2010, 2011 figures).

Their sales growth could hardly be attributed to internal factors or domestic policies, as both companies are part of global cartels and are price takers — prices are typically determined by dominant exporters.

The fourth source of growth was taxes. Yes, taxes contributed 0.37 per cent to the growth figure! 

Note that the figure indicates an increase by the said percentage in government revenues from taxes. While this is hardly a healthy source of growth, it is an indication that the government that had been complaining about the cost incurred by the Syrian crisis failed yet again to mention that it is collecting more in taxes and fees from the expanded population (refugees plus visitors who stayed).

The fifth largest item was services (banking, insurance, housing services and business), which contributed 0.32 per cent of the growth. This item also benefited from the population growth, otherwise it would have never grown.

The figures, with the exception of mining, owe their growth to the Syrian population in Jordan.

The costs of hosting the population have also decreased considerably. The government stopped subsidising electricity as the oil prices continued to fall (45 per cent since June 2014). 

Even the subsidy to water has fallen as the energy cost to government for pumping it has also fallen.  In fact, the government is making money from the Syrian guests whenever they use public transport, since the more fuel derivatives we all (us and them) consume the more tax revenues we generate for the government.

In light of the sad, pessimistic atmosphere generated by the government decisions last year, and given the very slow progress of the economy (even negative growth in terms of per capita income), the main contributors to growth have been our guests.

At least that is what the government figures say.

Most importantly, the government should get credit for allowing them in, but had the guests been fully allowed to integrate into the economy and allowed to work and benefit from Jordanian laws, the growth would have been greater than it is now.

[email protected]