Jordan: Economic and Political Overview

Economic Indicators

The Jordanian economy, severely impacted by the refugee influx and grown increasing dependence on international grants that followed the Syrian and subsequent refugee crisis, had to deal with the global effect of the COVID pandemic.  Nevertheless, its GDP growth amounted to 2.2% in 2021 and 2.5% the following year. Last year, the country’s economy grew an estimated 2.6% according to the IMF, supported by private consumption. The IMF outlook points to a growth rate of 2.7% in 2024 and 3% the following year, although the Israel-Hamas conflict may jeopardize Jordan’s growth prospects. The risk of the conflict directly threatening Jordan's exports, energy, water, or food supply is mitigated by long-term gas contracts, alternative trade routes, supply arrangements, and strategic reserves of fuel and wheat. Nevertheless, growth might decelerate in 2024 due to heightened political uncertainty and expected decreases in tourism inflows, particularly from the U.S. and Europe.

Jordan is one of the few countries in the Middle East that does not rely as much on its natural resources due to scarcity of hydrocarbon and water resources. Nevertheless, it is also one of the most committed countries to financial reforms within its region (privatisation, tax reforms, opening of the banking sector, etc.). Fiscal consolidation should persist in accordance with IMF program goals. Economic expansion and tax collection reforms, such as e-invoicing and track-and-trace measures for alcohol, are projected to boost tax revenues (constituting 70% of total revenues). External grants are forecasted to hit 2% of GDP in 2024, notably with the US, Jordan’s primary external contributor, elevating its aid to USD 1.45 billion annually for 2024-2029. The IMF estimated the general government deficit at 4.4% of GDP in 2023, with a stable outlook over the forecast horizon. The overall government debt, which consolidates central government debt holdings of the Social Security Investment Fund (SSIF), along with the debt of the Water Authority of Jordan (WAJ) and NEPCO guaranteed debt, stood at 93.8% of GDP at the end of 2023, slightly down from 94.1% in 2022. The IMF anticipates a gradual decrease in debt, with projections indicating it will decline to 89.5% by 2025. Meanwhile, the inflation rate was relatively low in 2023 (2.7%) and should hover around the same percentage in the short term. Overall, Jordan receives substantial financial and technical support from both multilateral and bilateral partners, including recent announcements of financial assistance from the UAE, Germany, and the EU.

Jordan faces significant challenges such as high unemployment, accessibility to affordable basic goods and services, and economic inequality. In addition to Palestinian refugees, Jordan has been contending with a substantial influx of refugees, notably from Syria, which could further strain already limited resources. Jordan also has to deal with a high unemployment rate, that rose further to 19.2% by the end of 2022 (World Bank), a high poverty rate and high levels of inequality. Unemployment affects university degree holders and women much more negatively, further contributing to inequalities.

Main Sectors of Industry

Agriculture in Jordan accounts for 4.8% of the GDP and employs approximately 3% of the workforce, according to the latest data from the World Bank. The country faces challenges in agricultural development due to the scarcity of water, with an agricultural area covering less than one-eighth of its territory. Principal crops include wheat, barley, lentil, tomato, cucumbers, eggplant, citrus fruits, olives, strawberries, and grapes. Jordan's natural resources primarily consist of phosphates and potassium. The country has also discovered six uranium deposits, which account for 3% of the world's reserves, and has signed numerous international agreements in the field of atomic energy.

Industry contributes 23.9% to Jordan's GDP and employs around 18% of the workforce. Mining and quarrying, particularly of phosphate and potash, are significant industries in the country. The manufacturing sector, however, is relatively limited and dominated by textiles, which has faced challenges due to international competition. Manufacturing is estimated to represent about 17% of GDP. In the first half of 2023, Jordan's industrial exports grew by approximately 2%, reaching JOD 4 billion, according to the Jordan Chamber of Industry.

The services sector is the largest contributor to Jordan's economy, accounting for 60.4% of GDP and employing 79% of the workforce. Communication technologies and financial services are particularly active sectors in the country. Distribution and tourism infrastructure also contribute substantially to GDP, although they have experienced some slowdown in recent years. Tourism revenue in Jordan increased to JOD 7,409.7 million in 2023, representing a 27.4% year-on-year increase, with 6,353,800 visitors welcomed during the year, as reported by the Central Bank. The construction and transport sectors are also expanding consistently. Government services play a significant role in the services sector, contributing 14.9% to GDP and employing 41% of the active population, according to the Jordan Strategy Forum.

 

Breakdown of Economic Activity By Sector	Agriculture	Industry	Services
Employment By Sector (in % of Total Employment)	3.2	18.3	78.4
Value Added (in % of GDP)	4.8	24.8	60.7
Value Added (Annual % Change)	5.9	3.5	2.5

Source: World Bank - Latest available data.

 

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Monetary Indicators	2016	2017	2018	2019	2020
Jordanian Dinar (JOD) - Average Annual Exchange Rate For 1 MUR	0.02	0.02	0.02	0.02	0.02

Source: World Bank - Latest available data.

 

 

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Indicator of Economic Freedom

Definition

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:

64,6/100

World Rank:

69

Regional Rank:

6

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 

Business environment ranking

Definition

Definition:

The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

Score:

5.33/10

World Rank:

65/82

Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024

 

Foreign Trade in Figures

Jordan is very open to international trade, so much so that there is a dependence on foreign capital; however, its relative share of GDP has diminished considerably after 2014 and is estimated at 86% (World Bank, latest data available). Exports are spearheaded by the textile industry, followed by the chemical and mining sectors (fertiliser, medicine, potash and phosphate). Jordan mainly imports petroleum oils, gold, motor cars, and fabrics (data Comtrade).

The United States was by far the main destination for Jordanian exports (20% of all exports in 2022), followed by India (14.6%), Saudi Arabia (9.9%), Iraq (7.5%), Indonesia (2.7%), and the United Arab Emirates (2.7%). On the other hand, China (15.3%), Saudi Arabia (14.9%), United Arab Emirates (7.8%), United States (5.5%), India (5.1%) were the main suppliers in 2022 (data Comtrade). Jordan is a member of the WTO and signed a free-trade agreement with the U.S in 2001, allowing the removal of customs duties on the majority of goods and services since 2010 when it was fully implemented. Jordan has also signed an Agreement of Association with the EU. In addition to the United States, Jordan is also party to bilateral trade agreements with Canada and Singapore and is a signatory to several regional trade agreements including the European Free Trade Association (Norway, Switzerland, Liechtenstein), Greater Arab Free Trade Agreement (GAFTA), and Aghadir Agreement (Egypt, Morocco, Tunisia) which is connected to the Association Agreement (EU).

Jordan's trade balance is structurally in deficit, mainly because of the country's reliance on hydrocarbon imports. The exports of goods amounted to USD 12.3 billion and the imports to USD 27.2 billion in 2022, up by 32.3% and 26.6% year-on-year, respectively (data WTO). However, the country is a net service exporter (USD 7.9 billion in exports against USD 5.7 billion in imports in 2022). According to the Jordan Department of Statistics, the value of exports in the first eleven months of 2023 reached JOD 8,221 million (of which 615 million of re-exports), whereas imports stood at JOD 16,952 million.

Sources of General Economic Information

Ministries

Ministry of Economy, Industry and trade
Ministry of Finance

Statistical Office

Department of Statistics

Central Bank

Central Bank of Jordan

Stock Exchange

Amman Stock Exchange

Search Engines

Baladna
Google Jordan

Economic Portals

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