Jordan’s Economic Outlook- April 2017

With record high unemployment and sluggish growth, Jordan’s economy continues to be impacted by repercussions from the Syrian crisis, including the presence of more than 655,000 registered Syrian refugees. Jordan’s main challenge is to stimulate job-generating growth. Tight fiscal and monetary policies are expected to continue as Jordan works towards fiscal sustainability and a lower debt-to-GDP ratio.

Jordan’s economy remains sluggish as growth slowed down in 2016 for the second year in a row—to an estimated 2% from 2.4% in 2015—further diverging from its potential. This is largely due to a weaker mining and quarrying sector, partly related to downward pressures on global potash prices, and to a confluence of factors related to spillovers from the Syria crisis, notably the closure of export routes to Iraq and Syria and lower tourism amid security incidents. Unemployment reached an historical high of 15.3% in 2016.

Jordan’s economy is expected to pick-up marginally to 2.3% growth in 2017; a slightly higher uptick is forecasted in the medium-term to average 2.6% over 2017-2019. The impact of reforms related to stimulating private-sector investments (such as through improving predictability of regulations, improving access to finance for small and medium enterprises, and trade facilitation) and higher exports due to the European Union’s relaxation of Rules of Origin should kick-in, and sectors such as tourism and construction are expected to improve.