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The problem of low growth

Nov 12,2017 - Last updated at Nov 12,2017

As of 2011, economic growth rate in Jordan dropped to unprecedented low levels. At the time, we convinced ourselves that the world economic crisis was to blame, a crisis that shook the world for five years, causing growth rates to decline worldwide.

The world has now recovered, economic growth rates around the world rose to almost the previous level.

The International Monetary Fund (IMF) expects the world economic growth rate this year to reach or exceed 3.6 per cent.

At the same time, the IMF expected economic growth rate in Jordan this year to be around 2.3 per cent.

Generally speaking, growth rates in small and developing countries are usually higher. What, then, is the problem that causes economic growth in Jordan to be and remain on the low side?

What makes things worse, the IMF does not expect higher growth rates for Jordan in the coming few years, despite the worldwide trend. If this projection is right, a growth rate in Jordan of 3 per cent or more is out of the question.

One has grown tired of the repeated excuses: unfavourable regional circumstances, especially the closure of the Iraqi and Syrian borders, and the continued disastrous consequences of the so-called Arab Spring in the whole region.

Losses caused by Arab Spring in the Arab world are estimated to have exceeded tens of billions of dollars, which led to a major contraction in the economies of the region in general.

These unfavourable and unstable conditions created an atmosphere of uncertainty. Potential investors do not know what the situation will be in the near future, a state of affairs that caused them to put on hold their plans, awaiting the outcome of a fluid and unpredictable situation.

This state of uncertainty has resulted in lower demand, and prices, at the Amman Stock Exchange, supposedly the mirror that reflects the economic state of affairs, along with the pessimistic business outlook.

Economic growth in Jordan during the first quarter of this year was 2.3 per cent, down to 2 per cent in the second quarter, year-on-year, an indication that the required recovery has not happened.

It seems that we have to live with this new normal. The current economic growth rate hardly keeps pace with the population growth, even when ignoring the presence of hundreds of thousands of Syrian refugees.

Can the government do anything about it?

It did: many national programmes are being produced to spur growth, but results are not satisfactory. Based on the facts, our efforts should be concentrated not on achieving new gains but simply on protecting previous gains.

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