You are here

‘Hiccup’ in economic growth expected this year — World Bank

By Khetam Malkawi - Dec 21,2015 - Last updated at Dec 21,2015

AMMAN — After four years of gradual recovery, the Kingdom’s economic growth is expected to slow down this year due to the spillover of security conditions in Syria and Iraq, a World Bank report said on Monday.

Titled “A Hiccup Amidst Sustained Resilience and Committed Reforms — Jordan Economic Monitor for Fall 2015", the report said real growth in the Kingdom’s gross domestic product (GDP) is expected to reach 2.5 per cent, in contrast with 3.1 per cent in 2014, which is the slowest rate since the first half of 2010.

“This setback in growth in the first half of 2015 is due to the closing down of trade channels with Syria and Iraq,” the report said, adding, however, that the low oil prices continue to have a positive effect on the current account deficit and the budget deficit.

This also led to an increase in the investment volume, especially in the diversification of sources of energy, according to the report.

Recent government incentives in regard to the real estate and tourism sectors have had a positive influence that will back growth in 2015, the World Bank said.

Therefore, economic growth rates are expected to register 3.7 per cent and 4 per cent in 2016 and 2017 respectively, the report added.

The report, according to Minister of Planning and International Cooperation Imad Fakhoury, was developed by the World Bank and not the government to enable the executive and the legislative authorities to benefit from its findings.

Speaking at the report’s launch ceremony, Fakhoury said that despite the slowdown in economic growth in the first half of 2015 due to the incidents in neighbouring Syria and Iraq, “we expect” improvements in growth in 2016 and 2017.

These expectations, the minister added, are backed by prudent economic administration.

According to Fakhoury, Jordan is surrounded by regional unrest and challenges, but “we have to be in the lead to counter these challenges… we also need to transform these challenges into opportunities”.

He also stressed that the 2025 Vision will enable Jordan to accelerate action to diversify resources and develop the infrastructure through partnerships with the private sector.

Ahmed Attiga, regional manager and head of mission at the World Bank’s International Finance Cooperation in Jordan and Iraq, said Jordan’s recent launch of the credit bureau is an achievement for the country as it will increase access to finance.

Officially launched last week, the bureau seeks to provide information for creditors on the track records of applicants for credit facilities.

Meanwhile, the report added that Jordan’s hosting of more than 600,000 registered refugees has led to a rise in unemployment in the first half of 2015, at a rate of 12.5 per cent, compared with 11.9 per cent during the same period in 2014.

The current account deficit is expected to reach 7.1 per cent of the GDP for the full year, as the effect of trade disruptions resulting from regional conflicts, the expected flat transfers of expatriates and the decline in foreign grants is forecast to exceed the decline in the energy import bill.

The central government’s fiscal deficit improved in the first seven months of 2015 and is expected to reach 4.1 per cent of the GDP for the full year.

The ratio of total public debt to the GDP is still on the rise, but it is expected to drop in 2016, supported by recovery in growth and a decline in debt burdens brought on by the National Electric Power Company.

The biggest challenge facing Jordan, the report added, lies in handling security repercussions of the crisis in Syria and Iraq. 

The base scenario in the report assumes that the events of the first half of 2015 are temporary, with the exception of repercussions that still weigh on trade. 

 

However, the deterioration in the security situation in the region, followed by a sharp increase in oil prices would exacerbate economic risks.

up
42 users have voted.


Newsletter

Get top stories and blog posts emailed to you each day.

PDF