Recent data shows that an economic recovery is under way in Jordan.
The GDP is expected to grow in 2022 at 2.4 percent in real terms, which is a
slight improvement over the level of growth in 2021. The recovery, albeit slow,
is a recovery and not a regress or a decline in economic activity, and can be a
cause of optimism, even if cautious optimism, thus replacing whatever
negativity persists.
اضافة اعلان
In terms of fiscal policy and public debt, tax
revenues increased by JD54.8 million to reach JD970.2 million in the first two
months of 2022, and Jordan’s debt fell by JD244 million from its level in 2021.
If the trend continues, the debt to GDP ratio can be expected to fall
significantly this year, which would free the budget to expand the capital
expenditure and increase investment in the country’s infrastructure, education
and health.
Remittances from Jordanians working in GCC countries
have increased by 1 percent, and may be expected to increase further as the
Gulf economies continue to gain due to the upsurge in oil prices. The GCC
economies are forecast to grow by 6.4 percent this year. The impact will
undoubtedly be felt in Jordan in the form of aid and remittances from these
countries.
Overall, the numbers show an improvement at all levels of the economy, which, as stated earlier, calls for optimism.
Inflation is expected to be around 2.8 percent this
year, which is much lower than that felt worldwide. The effect of the
Russian-Ukrainian war on Jordan may be diluted somewhat regarding the cost of
wheat and energy. The government has already purchased the equivalent of a
13-month supply of wheat, and oil has been bought through long-term contracts
which will safeguard the economy from further upward fluctuations, should they
occur.
Foreign reserves are at an all-time high. The current level of reserves is around $18
billion, which will cover 9.5 months of imports. This means that in the
implausible case Jordan does not receive any foreign currency from exports,
tourism, aid, and remittances, the Central Bank of Jordan has enough reserves
to cover over nine months of imports. Note that the suggested level of foreign
currency reserves is a two-month worth of imports.
Additionally, tourism was up 253 percent in the
first four months of this year relative to the same period last year.
Investment in the first quarter of 2022 rose by 107 percent relative to the
same period last year, and foreign direct investment has increased over
seven-fold from last year.
Overall, the numbers show an improvement at all
levels of the economy, which, as stated earlier, calls for optimism. Hopefully
this optimistic will translate into a bigger growth rate and further thrust of
the economy toward recovery.
The writer is CEO of the Envision Consulting Group and
former minister of state for economic affairs.
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