EBRD expects Jordan's economy to grow by 2.3% in 2025

AMMAN — The European Bank for Reconstruction and Development (EBRD) has forecast that Jordan's economy will grow by 2.3 per cent in 2025, driven by several key factors, including a reduction in regional conflicts, the reopening of the Syrian market to Jordanian companies, and a rebound in tourism and foreign investment.
In its report released on Thursday, the EBRD also predicted that Jordan's growth could reach 2.6 per cent in 2026 as uncertainty eases and the business environment improves.

However, it also warned that continued uncertainty over US foreign aid and trade policy could pose challenges to achieving higher growth rates.

The bank highlighted a slowdown in Jordan's economy in 2024, with growth from January to September registering 2.3 per cent year-on-year. This decline was mainly attributed to the impact of the wars against Gaza and Lebanon, which undermined business and consumer confidence. In addition, a drop in government revenues led to a reduction in public spending, putting additional pressure on the economy.

Despite these challenges, the report praised Jordan's commitment to fiscal discipline and structural reforms, which have bolstered confidence in its financial markets. As a result, Moody's and Standard & Poor's upgraded Jordan's sovereign credit rating in 2024.

Unemployment remained high at 21.5 per cent in Q3 2024, reflecting ongoing challenges in the labour market. While inflationary pressures increased in the second half of the year, headline inflation remained stable at 1.6 per cent in 2024, helping to limit the strain on household purchasing power.

In September 2024, the Central Bank of Jordan cut its interest rate by 50 basis points, in line with the policy stance of the US Federal Reserve.

The move was aimed at maintaining exchange rate stability and preserving the peg between the Jordanian dinar and the US dollar.

Despite regional instability, the report noted that Jordan's foreign exchange reserves remain at a comfortable level, covering about eight months of imports. However, the current account deficit widened to 6.6 per cent of GDP in the first three quarters of 2024, mainly due to a decline in exports and rising import costs.

The report also found that Jordan's total public debt, including government-guaranteed debt such as that of the Social Security Investment Fund, reached 115 per cent of GDP by December 2024.

The EBRD stressed that continued fiscal and economic reforms are essential to maintain financial stability and strengthen Jordan's ability to cope with future challenges.

On a global scale, the EBRD revised its regional economic forecast for 2025 down by 0.3 percentage points compared to its September 2024 outlook.

According to the latest Regional Economic Outlook report, growth in the bank's investment regions is expected to stand at 3.2 per cent in 2025, rising to 3.4 per cent in 2026.

The report, dubbed as "Growth slows in EBRD regions amid fragmenting trade and investment", also highlighted the ongoing global growth slowdown and the widening performance gap between advanced European economies and the US.