Jordan’s economic outlook for 2024

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In 2024, Jordan’s economy witnessed several developments that highlighted a delicate balance between relative stability in certain indicators and the persistent structural challenges hindering sustainable economic growth. Despite the government’s efforts to improve economic performance, local and regional conditions, coupled with global pressures, continued to constrain growth and development prospects.

Economic growth in Jordan recorded a rate of 2.4per cent, according to estimates from the World Bank. Although this rate fell short of ambitious expectations, it reflects relative stability in a turbulent economic environment. The performance was supported by improvements in specific sectors, such as manufacturing and services. However, the slow pace of both local and foreign investment hindered a significant leap in overall economic performance.

In the first half of the year, real growth reached 2.2 per cent, indicating a relative slowdown compared to the same period last year.

Tourism played a crucial role in supporting the economy, with tourism revenue in June growing by 2.1per cent compared to 2023, reaching 455.8 million Jordanian dinars ($642.9 million).

However, the first half of the year witnessed a 4.9per cent decrease in tourism revenue, dropping to 2.3 billion Jordanian dinars ($3.3 billion), due to a 7.9 per cent drop in tourist numbers. This decline highlights the need for greater efforts to diversify tourist markets and enhance the travel experience.

Inflation remained relatively stable, with an annual rate of 1.54 per cent from January to November 2024. This stability was driven by the steady prices of key essential goods, despite the volatility in global energy prices.

In November, inflation was recorded at 1.3 per cent, reflecting a balance between price pressures and government efforts to mitigate the impact of price fluctuations on the local market.

Regarding public finances, the budget deficit continued to put pressure on economic performance, reaching -5.2 per cent of GDP from January to September.

Public debt stood at 43.75 billion Jordanian dinars by the end of September, presenting a significant challenge for the government as it strives to balance expenditure funding while reducing debt levels. However, foreign reserves remained stable at $20.144 billion in November, reflecting the central bank’s effective management of monetary challenges.

The unemployment rate remained high at 21.5 per cent in the third quarter of 2024. This indicator reflects the ongoing structural challenges in creating job opportunities for youth and graduates, despite government initiatives aimed at encouraging employment. In the business environment, the banking sector performed positively, with bank deposits rising by 4.5 per cent year-on-year to reach 44.3 billion Jordanian Dinars.

Foreign direct investment (FDI), however, remained below expectations, highlighting the need to enhance the investment environment by simplifying procedures and attracting more investors. In the first half of 2024, Jordan experienced a 4 per cent increase in FDI, reaching 413 million Jordanian dinars compared to 396 million in the same period of 2023. Despite this modest rise, foreign investment continues to pose a challenge.

The data shows that Jordan’s International Investment Position, which reflects the kingdom’s net assets and liabilities, recorded a slight increase in external obligations, rising by 30 million dinars to reach 38.107 billion dinars by the end of the first half of 2024, compared to 38.077 billion dinars at the close of 2023. This suggests a marginal rise in Jordan’s financial commitments abroad. It also indicates that Jordan continues to rely heavily on external obligations, with a significant gap remaining in efforts to reduce debt or improve its international financial standing. This could potentially impact the government’s ability to sustain economic growth and attract more foreign investment.

In the energy sector, the kingdom continued to expand its renewable energy projects to enhance independence and reduce reliance on fossil fuels. This direction will not only help reduce energy costs but also strengthen national efforts towards environmental sustainability. However, the import bill remains a burden on the current account, which recorded a deficit of -6.8per cent of GDP during the first half of the year.

Despite some partial achievements, 2024 remains a year of challenges for Jordan’s economy. Key challenges include reducing unemployment rates, improving living standards, and increasing growth rates by attracting more investments.

As 2025 approaches, Jordan appears to have a significant opportunity to accelerate economic reforms and achieve a better balance between growth and social development.