External conflicts slow growth in Jordan — WB

AMMAN — Jordan faces ongoing trade and investment challenges stemming from the conflict in Syria and across the region, according to the WB latest update of Global Economic Prospects report.

Domestic political and security challenges coupled with continued spillover from external conflicts slowed growth in Jordan in 2015, the WB report update released late Tuesday added.  

Jordan, whose currency is pegged to the US dollar, has experienced deflation since 2015, it indicated. 

The extended period of low oil prices has not been followed by a significant boost to growth in oil-importing countries in the region, but the Kingdom has worked on its subsidies’ policy to contain deteriorating public finances by providing cash transfers to households. 

Yet, deficits remain above 3 per cent of the gross domestic product (GDP) in all oil-importing countries in the Middle East and North Africa region, and are financed by a combination of domestic and international borrowing, the World Bank said. 

This also includes concessional loans from international financial institutions, as is the case in Jordan, Morocco and Tunisia.  

Budget shortfalls are contributing to high and growing government debt as a share of the GDP, most prominently in Egypt, Jordan, and Lebanon, the report indicated. 

In Egypt, interest on this debt absorbs nearly one-third of government revenue, and in Lebanon nearly half, according to the WB revision. 

Unemployment 

Unemployment remains high in oil-importing countries, particularly among youth. The unemployment rate in Jordan rose to 13.7 per cent in the second half of 2015, almost 2 per cent above the 2014 average, continuing an upward trend underway since mid-2014, the report said.  

Estimates indicate that direct and indirect losses of the war in Syria and the advance of the terror group, Daesh, had been a cumulative $35 billion in Egypt, Iraq, Jordan, Lebanon, Syria, and Turkey as of mid-2014.

In several countries not grappling with widespread domestic conflict, including Jordan, a worsening of fragile domestic security or political stability could sap domestic sentiment and investor confidence and undermine economic activity, the report noted. 

In oil importing countries, government debt-to-GDP ratios need to be reduced to more manageable levels, the Bank advised. This applies to Egypt, Jordan, and especially Lebanon, where debt levels are among the highest of all emerging and developing economies.

The complex situation posed by the continued presence of a large number of Syrian refugees will complicate debt reduction in Jordan and Lebanon, the report pointed out.