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‘Inconsistent GDP growth forecasts’

Feb 28,2023 - Last updated at Feb 28,2023

A few weeks ago, the government successfully presented an executive programme aimed at modernising the Jordanian economy. This programme focuses on improving the competitiveness of the economy, promoting growth and creating job opportunities. The government aims to generate up to one million jobs by the end of the programme, at a rate of 100,000 annually.

The programme is based on eight engines for economic growth, covering 35 main and sub-sectors, and comprises over 366 initiatives, ten performance metrics, and four implementation bodies. The cost of the programme is estimated to be 41 billion dinars. The engines for growth include high-value industries, future services, Jordan as a global destination, leadership and innovation, sustainable resources, investment, sustainable environment and quality of life. The programme is divided into three phases, with the first phase running from 2023 to 2025 and including 183 initiatives. The government will adjust subsequent phases of the programme flexibly to suit economic developments.

The key performance indicator of the programme is achieving an average annual economic growth rate of approximately 5.6 per cent. Recent movements, visits, meetings and statements by officials, businessmen, and chambers of industry and commerce suggest that this target is achievable, leading to reduced unemployment rates.

On the other hand, the latest data from the fifth review of the Jordanian economy's performance within the government's economic reform programme, supported by the International Monetary Fund (IMF) Extended Fund Facility agreement, suggests that economic growth will remain around 2.7 per cent in 2023 and 2024 and an average of 3 per cent between 2025 and 2027. This raises questions about which expectations are more accurate and closer to reality: Those related to the economic modernisation vision or those related to the economic reform programme with the IMF?

A high GDP growth rate is indicative of a healthy and strong economy, creating more job opportunities and increasing income for individuals, as well as promoting investment and commercial activity. The IMF is satisfied with the Jordanian economy's performance so far, given the difficult global economic conditions, including recession and inflation during the COVID-19 pandemic, the Russian-Ukrainian crisis, and regional instability. However, it remains unclear how the government will achieve its target of creating one million jobs if growth rates remain as projected.

Forecast accuracy depends on various factors, including global economic conditions, political and security stability, and internal economic policies. Economic forecasts are often revised as new information becomes available. It is unclear whether the fifth review provided new information on which the IMF based its projections for GDP growth rates until 2027. The observer and the citizen hope for standardised GDP growth rates across government documents.

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