Real GDP is in its third year of 2 percent growth. On the supply side, services are expected to continue to buoy the economy, as tourism maintains a robust recovery—tourist receipts have already increased by 14.9 percent yoy during the first half of 2018 (H1-2018). However, decline in issuance of construction permits which bodes poorly for private investment, and expected weak consumption (public consumption is weighed down by ongoing fiscal consolidation, and private consumption is weighed down by sluggish job growth) comprise the immediate downside risks.
Strong net export and investment performance will be needed for the remainder of the year, with the latter potentially coming from increased confidence given the change in government over the summer.
Jordan’s growth outlook is strained by the precarious regional situation, the current account deficit, and a lack of fiscal space.
Economic recovery depends on reducing debt levels and implementing structural reforms on the one hand and identifying sources to expand outward-oriented investment on the other, while taking advantage of international assistance and potential regional recovery. As such, we expect only moderate growth over the medium term, with GDP rising from 2.0 percent in 2017 to 2.1 percent in 2018, 2.3 percent in 2019 and 2.4 percent in 2020.
The drivers are expected to be by services from the supply side and net exports from the demand side.