Despite widespread protests last month throughout the country against the rising cost of living, and gloomy budget figures, Jordan’s economy is poised to outstrip that of many European countries next year. The latest figures from the IMF in Washington estimate that economic growth will reach 3%, up from 2.9% in the second quarter of this year, a figure that stands in sharp contrast to the negative growth rates now being recorded in the 27 countries of the Eurozone.
Before the global economic downturn in 2008, Jordan was scoring annual growth rates of about 7%, and officials are hopeful that recovery next year will be followed by even better rates from 2014 onward, thanks to a rise in foreign direct investment. Shabib Ammari, the minister for trade and industry, said in September that while he expected FDI to reach up to $1.5bn next year, this could double in 2014, to some $3bn.
The second quarter figures demonstrate Jordan’s underlying strength – in tourism, communications and transport and finance. Tourism grew by an impressive 10% during the three months, fuelled by the construction of new hotels, museums and resorts that are increasingly attractive to visitors from the Gulf states as well as Europe and the US.
Local and regional tourism is also benefiting from projects such as Mirage, a multi-purpose destination covering 4,000 square metres of land being built by the Jordan Tourism Investments Company south of Amman. It expects to attract some 4,000 to 6,000 weekend visitors when it opens next Spring. Jordan’s rapidly expanding ICT sector, which currently produces some 75% of all Arabic-language content on the internet, along with other communications and transport activities, was up by 6.7%, while finance rose 5.7%.
Prospects of huge new revenues from the exploitation of the country’s rich oil shales in the coming years is also adding to the optimism, not least because their development would help to further reduce the government’s sizeable outlays on fuel subsidies, as well as giving a spur to private sector industries and businesses which stand to benefit considerably from lower energy costs. A Canadian company, Global Oil Shale Holdings, which is currently undertaking a feasibility study in the country, estimates that initial reserves could total 2.5bn tons of oil equivalent, and that production could amount to 50,000 barrels of oil a day over the next 40 years.
Meanwhile, Jordan is benefiting from the preferential support it receives from international donors. In August, the IMF approved a loan for $2bn to help support the government’s finances, which have been adversely affected by the disruption of gas supplies from Egypt this year and the consequent need to buy more expensive crude oil, especially for electricity production, at close to market prices from Iraq and other suppliers.
Trade revenues have also been hit due to the turmoil in Syria, a vital geographic conduit for imports to, and exports from, Jordan. In addition, the country has been burdened unexpectedly by the need to provide for more than 100,000 refugees from Syria in the past few months. As a result, Jordan’s prime minister, Abdullah Ensour, estimates that the budget shortfall could reach $5bn this year, a trend which explains why the government felt it necessary in November to sharply reduce its subsidies for petrol and diesel fuels, as well as those used for domestic cooking and heating. In addition to sparking the latest protests, the move is also expected to lead to a rise in inflation, pushing it up from about 4.2% to possibly 5% by next year. Both Kuwait and Qatar have now delivered a total of $2.5bn in aid, half of the $5bn in support pledged by the GCC countries a year ago. In addition, Kuwait’s investments in the private sector were expected to reach $10bn by the end of this year, according to the Chairman of the Jordan Chamber of Commerce, Nael Kabariti. The Kuwaiti aid, totalling $1.25bn over five years, will be used to fund the government’s capital and priority projects, costing a total of $1.17bn through 2015, with additional sums going to the country’s huge programme to expand its railway network. In addition to enhancing infrastructure and social services, the funds will also help to create thousands of new jobs, especially in the south and other impoverished areas.
Some 60% of Qatar’s $1.25bn grant will be used to fund local community development projects, another programme that will help to reduce unemployment, especially in the rural areas, according to Finance Minister Suleiman Hafez. Another 15% will be spent on projects in the energy sector, such as shale oil exploration, 15% on education and health and 10% on transport.
The Jordan Investment Board is now planning to launch a new promotional campaign, aimed at attracting funds for Jordan’s private sector, that will be focussed on the Gulf states, as well as North America. Acting CEO,
Awni Rushoud, says “We are seeing increasing interest in the country from investors in the GCC states, as well as from businesspeople across the world.” This includes $200m this year from Chinese firms anxious to tap into Jordan’s huge potential for renewable energy as well as in railways and other transport projects.
The recent announcement by King Abdullah II that the upcoming parliamentary elections in January will allow Jordanians to vote for their own prime minister for the first time is also finding favour with international donors such as the IMF and the European Union. And while the country’s opposition forces remain dissatisfied with the new electoral law, the King has hastened to reassure them that that, too, could be modified once the new parliament is in office. Jordan’s citizens, he told a conference in Amman in October, have the right to get clear answers to their questions “through practical programmes based on fact. The size of participation in the voting will determine the size of change,” he added.