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Jordan's macroeconomic indicators

Aug 15,2023 - Last updated at Aug 15,2023

Macroeconomic indicators are key to understanding and evaluating the performance of the national economy. These indicators reflect changes in Gross Domestic Product (GDP), unemployment rates, investment levels, and other aspects of economic performance. Analysis of available data for Jordan in the recent period with published information reveals significant developments in macroeconomic indicators.

Regarding Gross Domestic Product, the Jordanian economy recorded a growth rate of 2.8 per cent during the first quarter of 2023 at constant market prices compared to the first quarter of 2022.

As for the unemployment rate, there was a noticeable decrease in the first four months of 2023, where the unemployment rate reached 21.9 per cent, a decrease of 0.9 per cent compared to the first quarter of 2022 and a 1.0 per cent decrease compared to the fourth quarter of 2022. This continuous decline in unemployment rates requires explanation, especially since GDP growth rates did not experience significant leaps but rather returned to pre-COVID-19 levels or slightly higher. Another remarkable aspect is that unemployment rates continue to decline despite the increase in interest rates to reduce inflation rates, which was expected to have a negative impact on GDP growth and unemployment rates. Prominent economists have pointed this out in their studies. For instance, American economist Paul Samuelson noted in the introduction to his book on economics that policymakers' concern about inflation leads them to take painful steps such as reducing output and increasing unemployment rates to prevent or at least slow down inflation. If there is a time lag for the effects of raising interest rates, we hope that it will not occur in the coming months.

Regarding foreign direct investment, data showed an inflow of 807.3 million Jordanian dinars during 2022, compared to an inflow of 441.5 million Jordanian dinars during 2021, marking an increase of 82.9 per cent. Foreign investment reached 566 million Jordanian dinars in the first half of 2023.

Turning to foreign trade, total exports increased by 2.3 per cent during the first third of 2023 compared to the same period in 2022. National exports rose by 4.0 per cent, while the re-export value decreased by 17.2 per cent, and imports decreased by 0.3 per cent. Due to these developments, the trade deficit decreased by 2.7 per cent during the first third of 2023.

In the context of public debt and finances, the total public debt increased by 1.4 per cent by the end of March 2023 compared to the end of 2022. The public debt-to-GDP ratio reached 114 per cent, and this high debt-to-GDP ratio and its growth rates pose a significant challenge that must be seriously addressed.

The increase in the debt-to-GDP ratio serves as an indicator of concern, impacting the sustainability of the economy and the financial stability of the country. To alleviate the burden of the debt, the government and relevant entities should take effective measures such as enhancing efforts to improve general revenues through fostering a business-friendly environment and attracting investments. This will aid in diversifying revenue sources and reducing reliance on debt to finance projects and programs. It is essential to reduce the debt growth rates by implementing economic policies aimed at achieving sustainable and balanced growth. Focus should be placed on enhancing productive sectors and supporting exports to achieve income and expenditure balance.

The government also needs to present plans and programmes to restructure and manage debt effectively. This can be achieved by enhancing the feasibility of debt-funded projects and ensuring that borrowing is used for developmental purposes that serve the economy and society's interests.

It is also noteworthy that the Jordanian economy has continued to show positive indicators in terms of financial stability in banks, with increasing coverage and capital adequacy ratios. These indicators reflect the banking sector's commitment to international financial standards and banks' ability to adapt to shocks affecting the real economy.

Overall, Jordan's macroeconomic indicators reflect positive developments in economic performance. Achieving growth in GDP, improving unemployment rates, and increasing investment inflows are all positive signs suggesting sustainable economic recovery. These indicators encourage the continuation of efforts aimed at enhancing stability and growth in the country.

Macroeconomic indicators are key to understanding and evaluating the performance of the national economy. These indicators reflect changes in Gross Domestic Product (GDP), unemployment rates, investment levels and other aspects of economic performance. Analysis of available data for Jordan in the recent period with published information reveals significant developments in macroeconomic indicators.

Regarding Gross Domestic Product, the Jordanian economy recorded a growth rate of 2.8 per cent during the first quarter of 2023 at constant market prices compared to the first quarter of 2022.

As for the unemployment rate, there was a noticeable decrease in the first four months of 2023, where the unemployment rate reached 21.9 per cent, a decrease of 0.9 per cent compared to the first quarter of 2022 and a 1 per cent decrease compared to the fourth quarter of 2022. This continuous decline in unemployment rates requires explanation, especially since GDP growth rates did not experience significant leaps but rather returned to pre-COVID-19 levels or slightly higher. Another remarkable aspect is that unemployment rates continue to decline despite the increase in interest rates to reduce inflation rates, which was expected to have a negative impact on GDP growth and unemployment rates. Prominent economists have pointed this out in their studies. For instance, American economist Paul Samuelson noted in the introduction to his book on economics that policymakers' concern about inflation leads them to take painful steps such as reducing output and increasing unemployment rates to prevent or at least slow down inflation. If there is a time lag for the effects of raising interest rates, we hope that it will not occur in the coming months.

Regarding foreign direct investment, data showed an inflow of 807.3 million Jordanian dinars during 2022, compared to an inflow of 441.5 million Jordanian dinars during 2021, marking an increase of 82.9 per cent. Foreign investment reached 566 million Jordanian dinars in the first half of 2023.

Turning to foreign trade, total exports increased by 2.3 per cent during the first third of 2023 compared to the same period in 2022. National exports rose by 4.0 per cent, while the re-export value decreased by 17.2 per cent, and imports decreased by 0.3 per cent. Due to these developments, the trade deficit decreased by 2.7 per cent during the first third of 2023.

In the context of public debt and finances, the total public debt increased by 1.4 per cent by the end of March 2023 compared to the end of 2022. The public debt-to-GDP ratio reached 114 per cent, and this high debt-to-GDP ratio and its growth rates pose a significant challenge that must be seriously addressed.

The increase in the debt-to-GDP ratio serves as an indicator of concern, impacting the sustainability of the economy and the financial stability of the country. To alleviate the burden of this issue, the government and relevant entities should take effective measures such as enhancing efforts to improve general revenues through fostering a business-friendly environment and attracting investments. This will aid in diversifying revenue sources and reducing reliance on debt to finance projects and programmes. It is essential to reduce the debt growth rates by implementing economic policies aimed at achieving sustainable and balanced growth. Focus should be placed on enhancing productive sectors and supporting exports to achieve income and expenditure balance.

The government also needs to present plans and programmes to restructure and manage debt effectively. This can be achieved by enhancing the feasibility of debt-funded projects and ensuring that borrowing is used for developmental purposes that serve the economy and society's interests.

It's also noteworthy that the Jordanian economy has continued to show positive indicators in terms of financial stability in banks, with increasing coverage and capital adequacy ratios. These indicators reflect the banking sector's commitment to international financial standards and banks' ability to adapt to shocks affecting the real economy.

Overall, Jordan's macroeconomic indicators reflect positive developments in economic performance. Achieving growth in GDP, improving unemployment rates, and increasing investment inflows are all positive signs suggesting sustainable economic recovery. These indicators encourage the continuation of efforts aimed at enhancing stability and growth in the country.

 

Adli Kandah is an economic and financial consultant and adviser 

 

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