Jordan's economy to witness sustained, yet slight, growth in 2017-2018 — report

AMMAN — Jordan's economy is "on the right track" with economic growth, expected to reach 2.3 per cent this year and a slightly higher level in 2018, according to a report recently issued by the Arab Monetary Fund (AMF).

As economists differ on the projections, the AMF report on the economic outlook for Arab states indicated that, in spite of regional uncertainty, the Jordanian economy continues to witness positive improvements, especially in terms of tourism revenues, which rose by 17.9 per cent in the first third of this year, compared to the same period last year. 

The report indicated that regional developments, the large number of Syrian refugees in the Kingdom, as well as high unemployment rates will continue to affect Jordan, adding that, in light of increased pressure caused by the refugee influx and a decline in grants extended to Jordan, the country will resort more to borrowing, which will increase public debt.

International credit rating agency Standard and Poor’s has downgraded Jordan’s rating to B+, from BB-, citing poor performance on external debt, among other factors. 

The rating agency expects a low economic growth of an average of 2.7 per cent over 2017-2020, compared to 6.5 per cent over 2000-2009, citing, among other reasons, fiscal pressures resulting from Syrian refugee inflow.

The unemployment rate in the second quarter of 2017 stood at 18 per cent, marking a 2.7 per cent increase when compared to the same period of last year, the Department of Statistics  announced in October.

According to officials, there are 1.4 million Syrian refugees in Jordan, which is one of the main challenges that the Jordanian economy is currently facing. 

However, and in spite of these challenges, the national economy has been improving, the report showed, expecting it to grow by 2.3 per cent in 2017 and 2.5 per cent in 2018, thanks to financial and fiscal reforms announced by the government in addition to plans to create jobs for Jordanians.

Last month, Prime Minister Hani Mulki announced that the government was working on a JD100-million project to create new jobs for Jordanians with a series of public-private projects that will help boost economic growth.

Economist Wajdi Makhamreh said he was “optimistic” about higher growth rate in 2018 due to the reopening of the border crossing with Iraq, which is a major market to the country’s economy.

“The growth of the Iraqi market makes my forecast for 2018 very optimistic,” Makhamreh told The Jordan Times over the phone on Saturday.

“I believe that Jordan will be able to achieve the target of 2.5 per cent in 2018 and maybe slightly higher if the borders are reopened with Syria as well…. For 2017, it is still early to see evident results for the reopening of the border,” Makhamreh added.

“Currently, the government is applying reforms in order to cut budget costs and there are other improvements that are helping the economy. But the changes are taking place on a small scale; that’s why I am more conservative about the Arab Monetary Fund’s forecast of a 2.3 per cent of economic growth this year,” he stated. 

Economist Zayyan Zawaneh was less optimistic about growth figures in these two years as he said there has been no real impact on the country’s economy since the reopening of the borders with Iraq.

“After the reopening of the border with Iraq, other internal developments in the country started to have their impact and I am not optimistic about the government being able to achieve these targets for 2017 and 2018, taking the current challenges into account,” Zawaneh told The Jordan Times.

“The expected increases in taxes referred by the government over the past period would also play a role in not being able to achieve the desired economic growth in 2018 and it is still early to see to which degree the reopening of the Iraqi border will drive growth,” Zawaneh said.

“I do believe that Jordan as a country is able to meet this percentage of growth as the Jordanian economy has always been around this 2 per cent; but everything depends on the government’s actions,” he concluded.