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Disappointing growth in 3rd quarter

Jan 12,2014 - Last updated at Jan 12,2014

Tables of the gross domestic product (GDP) pertaining to the third quarter of 2013, which were published by the Department of Statistics at the end of the fourth quarter, were disappointing. They turned out to be lower than expectations.

The announcement indicated that the economic growth rate in the third quarter of 2013 was around 2.8 per cent year-on-year, calculated in constant prices. Thus, the average growth rate in the nine months of 2013 amounts to 2.83 per cent.

Based on the above results, the growth rate in the fourth quarter of the year must reach 3.5 per cent in order to make the overall average for the whole year 3 per cent, as expected.

I am afraid that the fourth quarter, whose performance will not be known before the end of March, will further reduce the growth rate for the year as a whole to below 2.8 per cent, due to the negative impact of the snowstorm that hit the country and almost brought the public life and activity to a standstill for several days.

The annual deflator, i.e., inflation rate as calculated on the GDP components during the third quarter, is 5.1 per cent, slightly higher than the inflation rate based on consumer items.

It is also noted that the net indirect taxes on goods and services rose by 10.1 per cent in current prices, while the economic sector rose by only 7.7 per cent, also in current prices, an indication that the increase of indirect taxes and fees exceeded the actual growth in the economy as a whole.

This may be explained by the reduction in fuel and other subsidies, which are treated as a negative tax.

The manufacturing industry, consisting mainly of small- and medium-size projects, contributed 17.3 per cent of the GDP and was one quarter of a percentage point in the general growth rate of 2.8 per cent.

It is regrettable that the extracting industry, mainly potash and phosphate, went in the wrong direction and recorded a substantial retreat that led to the reduction of the overall growth rate of the economy.

Sectors that contributed to growth more than others are finance, insurance and businesses, followed by transportation, storage and communications, a fact that proves the importance of services in the general economic growth in Jordan,

Assuming that the population growth is in the order of 2.2 per cent, ignoring the Syrian refugees, one can conclude that the per capita income was maintained, taking into account the dinar purchasing power, but per capita income did not achieve a substantial improvement.

This goes contrary to the general belief that several groups of the society achieved sizeable gains in their cash income.

One may admit that the gross domestic product is not the ideal instrument to measure the extent of development and well-being of the people, but it remains the best instrument available.

It is important to evaluate the qualitative changes before we can be sure of the degree of progress achieved during the year.

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