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Overview

Jordan has begun its recovery from the COVID-19 shock — real GDP grew by 2.2% in 2021 following a 1.6% contraction in 2020. Growth rebounded to 2.5 percent in Q1-2022, supported by the reopening of the economy and the recovery of contact-intensive services notably tourism. However, higher global commodity prices led to an acceleration in headline inflation and labor market conditions remain challenging. The unemployment rate is still above pre-pandemic levels (22.6% in Q2-2022), especially among women (29.4%) and youth (46.1% among those under 25 years old). Labor force participation is also low, (33.5% in Q2-2022), particularly for women (14.2%), one of the lowest rates in the world.

Recent price increases are especially affecting the poorest households. The unfavorable global context also poses significant risks to Jordan’s external sector, despite the robust export growth and the solid rebound in travel receipts. At the end‑of 2021, Jordan’s public and publicly guaranteed gross debt stood at 113.7% of GDP[1] (debt net of SSIF[2] debt holdings at 92% of GDP).

Jordan is one of the most water-scarce countries in the world and imports over 90% of its energy and national grain consumption needs. Jordan’s population has also more than doubled (from 5 to 11 million) over the past two decades, putting additional pressure on limited natural resources.  Jordan also faces several climate-related hazards that exacerbate these challenges including significant temperature increases, precipitation decreases, and increased incidents of drought.  In the region, Jordan has been a pioneer on climate with ambitious Nationally Determined Contribution (NDC) targets, a green growth strategy, and efforts to green Jordan’s public and private investment framework and its financial sector.  Jordan’s fiscal situation demands that it finds private sector solutions to climate challenges and that it incentivizes these solutions from a climate lens as part of its development model.

Even prior to the COVID‑19 crisis, Jordan’s economy had been struggling with persistently sluggish growth dynamics and structural challenges. Between 2016 and 2019, real GDP growth averaged about 2%, insufficient to create enough jobs for Jordan’s young labor force. Part of this weak growth performance traces back to multiple external shocks Jordan has experienced in the past decade, including regional conflicts and the influx of nearly 1.3 million Syrian refugees (representing almost 13% of the total population). Sitting at the center of a volatile region, Jordan continues to play a role as an anchor for regional stability and for the global public goods it provides by hosting refugees and promoting cross-border regional cooperation and trade.

Jordan’s economic transformation remains contingent on identifying opportunities to expand the economy’s outward orientation and to implement reforms needed to promote private sector-led growth and job creation.  The WBG has been a key partner on Jordan’s reform agenda since 2018 and the launch of the Government of Jordan (GOJ) Reform Matrix.  The GOJ’s Economic Priorities Program (EPP) 2021–2023 furthers this agenda by prioritizing key business environment reforms activating Public Private Partnerships (PPPs) and financing in key sectors for investment and job creation. In 2022, Jordan launched a new Vision for Economic Modernization to target growth and opportunities over the next 10+ years for the country as well as a Public Sector Modernization Plan. Both processes will also guide inclusive and resilient growth and development efforts moving forward.  

 

[1] Includes securitization of arrears from IMF’s 3rd Review Report, December 2021.

[2] Social Security Investment Fund.

Last Updated: Jan 09, 2023

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Jordan: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments
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Nabeel Darweesh
+ 962 798 277 215