Jordan is currently facing back-to-back second and third waves of COVID-19 infections, while the country’s major economic indicators continue to deteriorate. The twin deficits have substantially widened, the debt level has increased, and unemployment is rising. However, the fall-out on Jordan’s economic growth during 2020 remains relatively modest compared to peer countries. Going forward, Jordan’s economic outlook largely depends on the rebound in global demand and international travel as well as the pace and scale of domestic vaccination.
The Jordanian economy contracted by 1.5% during the first nine months of 2020 (9M-2020). The impact of the shock on GDP remains relatively muted compared to peer countries. Despite this fact, COVID-19 has had a particularly devastating effect on the country’s travel and tourism sector, which accounted for around 18% of GDP and of total employment in 2019.
In the immediate run, several policy measures are expected to provide some boost including public sector employees’ salary increase, social security net programs and the minimum wage increase. Exports are expected to perform better as demand strengthens in the U.S. and Gulf countries. Nevertheless, growth in the immediate run faces significant downside risks due to rising COVID-19 cases and slow vaccination, and over medium-term remains constrained by the country’s chronic structural weaknesses.