JEM report sheds light on COVID impact, development challenges

AMMAN — The Spring 2021 edition of the Jordan Economic Monitor (JEM): Uncertain and Long Trail Ahead, a report prepared by the World Bank Group (WBG)-MENA region, was launched on Monday during a virtual panel discussion that provided a view on the recent economic developments, outlook and development challenges in Jordan.

This report, which is published by WBG twice per year, covers the economic developments in the Kingdom, placing particular emphasis on the country’s economic growth, labour and unemployment situation, fiscal and debt developments, as well as monitory policies and future outings. Additionally, the report assesses the impact of the pandemic on the economy.

Hosted by the Abdul Hameed Shoman Foundation (AHSF), the Spring 2021 JEM report contains “special themes”, offering a snapshot of the private sector and a review of inequality in Jordan and the wider MENA region. 

Despite the progress in the deployment of COVID-19 vaccines, the uncertainty about the pandemic path is still salient, the report showed. It added that “uncertainty and an uneven global recovery are likely to slow the return of contact-intensive sectors, such as services and tourism”.

“With the release of this report, we are reminded of the impact of COVID-19, which cannot be in any way understated,” said Rami Adwan, panel discussion moderator, in his opening remarks.

Underlining the importance of the report, Adwan pointed out that the report provides timely data to researchers and policy makers that examine past performances and provide input into decision-making policies.

Despite being a small open economy, the impact of global economic downturn, trade disruptions, unprecedented decline in international tourism and local economic disruption during 2020, led to a “modest” 1.6 per cent contraction in Jordan, according to the WBG website.

In her opening remarks, Saadia Refaqat, senior country economist with the WBG, said that the reduced impact which made Jordan among the countries that “experienced no growth contraction or very little contraction” can be attributed to having well-coordinated fiscal and monetary policies, in addition to benefitting from the significant decline in the cost of oil imports, which between 2019 and 2020 declined almost 34 per cent.

Refaqat added that among the things that helped in mitigating part of the pandemic-related shock is the government’s fiscal and monetary stimulus packages and targeted cash support to poor and vulnerable households, totalling about 10.5 per cent of GDP.

 On the same note, Saroj Kumar Jha, World Bank Mashreq Regional Director, said: “The Government of Jordan has been able to mitigate some impacts of the crisis through timely and ambitious support programmes for affected sectors and vulnerable workers, but challenges remain.”

Panelist Nedal Azzam, who is the executive director of the research department with the WBG, talked about the government’s, Central Bank’s and Social Security Corporation’s interventions amid the ongoing pandemic, which he described as “efficient, timely, targeted and proactive”.

Furthermore, Refaqat, who is also the author of the report, noted that “although global economy shows signs of recovery, but recovery remains uneven at best,” adding that the COVID-19 crisis has further amplified pre-existing inequalities between rich and poor households, locally and globally.

“The current crisis provides a window of opportunity to build back better,” said Refaqat who highlighted that Jordan needs to focus on reforms that can be felt by Jordanians and the private sector by improving its investment climate to contribute to growth and job creation.

“Jordan has a big problem of unemployment,” according to Zafiris Tzannatos, senior consultant in the field of development strategy and social policy, who continued that it is time to do things differently and improve the investment climate.

 “A crisis creates the need to reconsider what we have been doing, rather than moving ahead the way we did before,” stated Tzannatos during the discussion.

Economist and banking expert Adli Kandah said that the Kingdom’s tourism sector has been hardly hit amid the unprecedented global pandemic. Nevertheless, tourism activity has improved at the Dead Sea, which is now a “safe area”, as occupancy levels increased by 60 per cent, meaning that Jordan’s tourism is starting to gain momentum.

According to Kandah, the tourism sector accounts for about 14 per cent of Jordan’s GDP and employs 60,000 people directly and indirectly.

The report also showed that a range of investment-enabling reforms is needed to support strong recovery, given that Jordan was experiencing weakening economic growth and stagnating productivity prior to the COVID crisis, according to the WBG website.