World Bank forecast for Jordan’s GDP growth ‘realistic’ — pundits

AMMAN — A day after the World Bank forecast that Jordan’s economy is expected to increase by 2.4 per cent in 2018, economists on Wednesday said that such a “low” prediction is “realistic” as there will be no breakthroughs ushering in better economic performance this year.

The World Bank report, e-mailed to The Jordan Times, indicated that Jordan’s gross domestic product is expected to increase by 2.5 per cent in 2019 from 2.1 per cent in 2017

The report said that improvements seen in tourism, mining and quarrying are expected to have driven a timid improvement in growth in 2017. 

However, the economy remains burdened with ongoing uncertainty in Syria, slow revival of economic cooperation with Iraq and an economic slowdown in the Gulf Cooperation Council. In addition, the economy is subject to a slow pace of structural reforms that is impeding a strong recovery in growth, the report indicated.

“Over the past 10 years, economic growth was between 2-3 per cent, and this year nothing major is expected to boost the economy,” economist Mazen Marji told The Jordan Times on Wednesday.

“The closure of the borders with Syria remains a major issue and the reopening of the borders with Iraq has not been fully utilised as there are still some challenges,” Marji said.

Even if the borders with Syria are reopened, there will be no immediate major positive impact on the economy.

“There are other players and countries in the markets whose products will be competing with ours,” said Marji.

“In Iraq, our trucks are still not allowed to enter the market and there is fierce competition, too,” he said.

Economist Wajdi Makhamreh agreed.

“If the Syrian market is not reopened to our products and there is no substantial and concrete increase in foreign direct investments in the Kingdom, we cannot expect economic growth to  exceed 2.4 per cent, aware that our market is small and vulnerable to external factors,” Makhamreh said.

The World Bank report indicated that poverty is likely to have risen in Jordan given the upward trend of inflation and unemployment and sluggish growth.

Economists agreed, saying there are many factors to why poverty rose in Jordan over the past years.

“There has been no significant increase in salaries over the past years either in the public or the private sectors…the cost of living has been on the rise after taxes and customs fees went up,” Marji said.

“The fuel prices, which affect all other products, have been rising after the government ended its subsidy, and the purchase power of Jordanians has consequently declined,” he explained.

He added that unemployment rates in Jordan have also increased. The unemployment rate remained elevated at 18.5 per cent in the fourth quarter of 2017, according to official figures.

“Higher rates of unemployment mean that are fewer Jordanians working and thus more are becoming poorer,” he said.

Makhamreh noted that the public sector remains the largest employer.

“A large percentage of salaries of workers in the public sector are in the range of JD450 to JD550, and this is not enough amid rising costs of living, rent, transportation and other commodities,” the pundit said.

Official figures estimate that 14.4 per cent of the population lived in poverty during 2010. 

The national annual poverty line for 2010 was set at JD813.7 per individual per year. 

The World Bank report indicated that Jordan has not released poverty estimates since 2010 due to issues with data quality for the 2013-14 Household Expenditure and Income Survey (HEIS). 

The 2017-18 HEIS, which will be representative of Jordanian, non-Jordanian and Syrian nationals was initiated in August 2017.