Eid outfit loans prompt mixed reactions from economists

AMMAN — A local financing service provider is offering six-month loan instalments for Eid outfits ahead of holiday celebrations, triggering mixed reactions among economists. 

The same provider previously offered loan options for mansaf purchases during Ramadan.

In a post on its official Facebook page, the company listed several clothing stores that is partnering with the company for the instalment plans.

Economist Khaled Salameh told The Jordan Times that the offer outfits is a “positive step” for the economy. 

“Such a step promotes consumer spending and stimulates economic activity,” Salameh said. 

By providing accessible financing options, the institution allows individuals to make purchases they might not have been able to afford upfront, thereby boosting sales in the apparel sector and generating revenue for retailers, said Salameh.

“This can contribute to the growth of the retail sector and overall economic development,” Salameh added. 

Meanwhile, economist Hussam Ayesh told The Jordan Times that such offers encourage consumer debt and overspending. 

By promoting instalment plans, the financial institution may be tempting individuals to make purchases that they cannot afford in the long run, potentially leading to financial strain and defaults on payments, Ayesh said.

“This can create a cycle of debt and financial instability for individuals, and may have broader implications for the economy, especially in light of interest rate increases,” Ayesh added. 

Detailing his concerns, Ayesh described the loan offer as indicative of the poor economic conditions that the majority of Jordanians are facing,

“People are in trouble. People can’t balance their spending with their income. When it comes to taking out loans for food — which is a necessity — this indicates that the vast majority of Jordanians are struggling to make ends meet,” Ayesh said.

Meanwhile, Asad Qawasmi, representative of the clothing, footwear, and jewellery sector at the Jordan Chamber of Commerce (JCC), told The Jordan Times that the market is currently experiencing a “weak state”.

“Jordanians are prioritising spending on healthcare, education and food; clothing has become somewhat distant from the priorities of Jordanians,” Qawasmi said. 

Qawasmi added that previous pre-Eid seasons were better for the apparel sector, noting that the market usually witnesses strong purchasing activity before the holiday.