In 2019, Jordan pursued important structural reforms, introducing new regulations to govern aspects of financial transactions, such as insolvency, digital payments, and public procurement, and in so doing, becoming one of the top 20 performers in the World Bank’s 2020 Doing Business report, which takes into account a country’s progress on making it easier for small- and medium-enterprises to operate.
In collaboration with the World Bank and other development partners, it has also developed a Five-Year Reform Matrix to lay the foundations for more sustainable, inclusive growth that can deliver on agendas involving jobs, youth, and gender. These medium-term reforms aim to make the economy more efficient and reorient it toward export-led growth by creating a better business and investment environment.
Jordan still faces external regional challenges, however, with the crises in neighboring Syria and Iraq causing influxes of refugees, greater health and education costs, and disruption to its trade routes. Regional uncertainty and reduced external assistance will continue to put pressure on Jordan in the short- and medium-term. Real GDP growth was 1.9 percent in 2018, marginally lower than in 2017, and stood at 1.8 percent during the second quarter of 2019, compared to 2.1 percent for the same period last year. Prolonged weak economic growth is reflected in elevated unemployment indicators and a declining labor force participation rate. The unemployment rate edged up in the second quarter of 2019, reaching 19.2 percent, compared to 18.7 percent in the same quarter in 2018. Unemployment patterns consistently show high unemployment among females, youth, and university graduates.
In terms of fiscal performance, according to estimates for January–July 2019, consolidation continues to be challenging due to slippage on the domestic revenue side and limited flexibility to curtail spending. For this period, data puts the fiscal deficit (excluding grants) at 2.8 percent of GDP, higher than for the same periods in 2018 and 2017 when it stood at 2.7 percent and 2.3 percent respectively. The January–July 2019 deficit is 70 percent of the budgeted target deficit of 4.0 percent of GDP for 2019.
Jordan’s balance of payments is showing significant improvement because of favorable terms of trade, which have helped curtail the cost of imports, largely due to a decline in international oil prices. Export growth is showing moderate pick-up; tourism receipts remain robust, but FDI flows remain stagnant, which remain a concern. The stability of Jordan’s economy relies on its access to international markets and the realization of the multilateral and bilateral commitments made to support it.
Last Updated: Oct 01, 2019