The Jordanian Economic Forum has issued a highly
significant economic paper on the impact of price spikes in countries of origin
and their effects on the Jordanian economy. The paper serves as an early
warning for the government to prepare for a substantial upcoming rise in global
prices. This will have a significant impact on the local market and the livelihoods
of citizens, whose meager incomes will be subjected to new drains and additional
burdens.
اضافة اعلان
The crazy price spike that is currently taking place in
global markets is not limited to one commodity, such as oil, as the case was in
the past. It now manifests itself as an increase in the price of most major
commodities, including food, agricultural products, raw materials, and fluctuating
shipping prices, which have multiplied by more than 13.
The trade issues witnessed around the world of today
between big and rich countries have produced a price that is paid by small importing
countries, such as Jordan, which seek to secure their needs. There is a frantic
race among countries to store vast supplies of raw materials and essential
goods, not to mention that many essential commodities like food products, have
had production shortages in their countries of origin.
This has damaged production and harvests, such as what
happened with corn and rice, resulting in vast and successive price hikes. For
instance, sugar increased by 35 percent, rice by 25 percent, oil has neared 100
percent, and raw materials were up by 5 percent. Also included are production materials
such as steel, copper, aluminum, fertilizers, and others, which are on an
unprecedented rise.
Jordan's economy is quite susceptible to the
repercussion of these developments, and it is not very proactive regarding what
is going on globally. This is due to its small size and reliance on imports, as
the country buys more than 90 percent of its needs. As a result, Jordan is too
powerless to alter the global trade equation.
Internally, the government should take some preventive
measures aimed at mitigating the economic impact and threats to consumers,
particularly those of middle and low incomes. It should also try to keep the wheel
of industrial production running.
The government is obliged to make its moves in the
face of the global wave of high prices, the most important of which should be storage
and having in place a food security system. It needs to push the wheel of
investment in this sector and grant it exemptions and incentives that enable
the private sector, in partnership with the government, to build large
warehouses to preserve products for long periods of time, and enable both
sectors to store products before prices go higher. Unfortunately, existing private
storage facilities, some of which are success stories, suffer from government
pressure.
They also suffer from unreasonable fines imposed under
the pretext that warehouses practiced leasing and thus violated the Investment
Law. These practices on the part of authorities constitute a huge impediment to
efforts aimed at boosting food security in the
Kingdom, and there are many real
examples that illustrate this point.
Facing rising prices, the only solution available to the
government to mitigate impacts on local markets is to exempt investors from
some fees and make life easier for citizens.
The fear is that the government may stay paralyzed by
the uncontrollable global price changes, in the absence of effective measures
to curb the enormous hikes. If that were the case, then the living and
industrial situation will be dreadful.
What is required is quick and adequate collaboration
between the government and the private sector, the formation of a joint crisis
cell with the private sector, and arrangements to protect local markets as much
as possible from the crazy price hikes by securing material and essential
commodities at acceptable prices.
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