Jordan’s economy has been hit hard by the COVID-19 pandemic amid already low growth, high unemployment and growing debt. The World Bank estimated the Jordanian economy to have contracted by 1.6% in 2020, with unemployment rising to 24.7% in the fourth quarter of 2020 and youth unemployment rates reaching an unprecedented 50%. The economic shock of COVID-19 has exacerbated both existing structural weaknesses in the economy and unresolved social challenges, putting pressure on country’s fragile macroeconomic stance.
The Government of Jordan (GoJ) has enacted a series of plans and programs to address the health and socioeconomic impacts of the pandemic. The GoJ launched two social protection programs in 2020 and 2021 to support vulnerable households and workers, as well as implementing measures designed to support businesses, including delayed tax payments, partial payments of salaries, and special loan programs for small- and medium-sized enterprises. Jordan launched its COVID-19 vaccination program in January 2021, which includes equitable access for anyone residing in Jordan (including refugees) to vaccines.
The speed of Jordan’s economic recovery in the medium-term largely depends on the evolution of the pandemic and whether reforms are put into effect. Jordan has made progress on foundational reforms that aim to improve the environment for public and private investment and contribute to job creation and economic growth. These reforms are anchored in the Five-Year Reform Matrix, which has now been incorporated as a reform pillar in the Government of Jordan’s new Government Indicative Executive Program (GIEP) 2021–2024. The Reform Matrix was developed in collaboration with the World Bank and other development partners. Moving forward, a results-based focus on unlocking priority areas of reform is needed to address structural challenges in the economy, the question of open markets, and spur investment as an engine of recovery, growth, and job creation.
The COVID-19 pandemic has had significant economic repercussions in Jordan, given the country’s small and open economy with its high rate of connections to the rest of the world. The pandemic has had particularly profound effects on the service sector, travel receipts, and tourism—all key sectors of growth for the Jordanian economy. Jordan’s unemployment rate, which marginally increased from 18.3% to 19% between 2017 and 2019, rose sharply as a result of the economic shock from the pandemic, reaching 24.7% in Q4-2020. Female unemployment, which had been declining between 2017 and 2019, from 31.2% to 27%, rose sharply to 32.8% in Q4-2020. Moreover, youth unemployment (15–24 years) jumped significantly—from 40.6% in 2019 to an unprecedented high of 50% by the end of Q4-2020.
Jordan had made notable improvements in narrowing its current account deficit in the two years prior to the pandemic but the global economic slowdown due to the pandemic appears to have reversed this trend. The deficit (including grants) had decreased from 10.6% of GDP in 2017 to 7% of GDP in 2018, and to 2.1% of GDP in 2019; however, in 2020, it expanded to 8% of GDP in 2020 because of an unprecedented (76%) decline in travel receipts along with a 9% decline in remittances, despite significant contraction in the trade balance.
Last Updated: Jun 14, 2021