Iraq instability a blow to Jordan’s economy — World Bank

AMMAN — The current security crisis in neighbouring Iraq is expected to adversely affect the volume of Jordanian-Iraqi trade, especially after the closure of the border in late June, a World Bank report said.

The “Predictions, Perceptions and Economic Reality — Challenges of Seven Middle East and North Africa Countries Described in 14 Charts” report said the crisis in Iraq, where militants from the Islamic State have been controlling large areas, has curtailed trade with neighbouring countries such as Jordan and Lebanon.

“Iraq is an important export market for Jordan, representing 20 per cent of total Jordanian exports… Exports to Iraq doubled during the last few years from $530 million in 2007 to around $1 billion in 2012,” the report said.

“The decision to close the Jordanian-Iraqi border in late June, for security reasons, would adversely affect both Jordanian and Iraqi trade volumes,” the World Bank said.

According to the quarterly report, posted on the World Bank’s website earlier this week, Jordan is among seven countries of the region that are trapped in a “poor policy-poor growth” cycle that prevents their economy from moving to a sustainable growth path.

“The macroeconomic performance of seven countries — Egypt, Tunisia, Iran, Lebanon, Jordan, Yemen and Libya — stand out among the diverse countries of the Middle East and North Africa region,” said the report.

Despite the “poor growth”, the study cited tourism as one of the Kingdom’s sectors that witnessed improvement.

It said official quarterly data for Jordan show some positive signs of improvement in economic activity on the back of the increase in public spending and private consumption, both of which were supported by the Gulf grants. 

“Tourism activity is improving after years of slowdown, with increases of about 7 per cent in the number of arrivals in the first quarter of 2014 compared to the previous quarter,” the report said, adding that remittances have also increased by 3 per cent in the first six months of 2014 compared to the same period of last year. 

Meanwhile, the gender gap in unemployment in Jordan is still large, the report said, with the female youth unemployment rate almost three times the male youth unemployment rate in Egypt and double in Iran, Jordan and Yemen.

Female youth unemployment in Jordan stood at 50 per cent, which is the same rate in Yemen.