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Economic performance in 2013

Jan 05,2014 - Last updated at Jan 05,2014

The end of 2013 provides an opportunity to look back and evaluate the economic performance during the past twelve months, identify the successes and failures, and draw lessons for the future.

On the positive side, the economy registered a growth rate of 3 per cent in real terms in spite of the pressing circumstances in the region.

Inflation declined steadily. Consumer price index at the end of 2013 was only 3 percentage points higher than the index at the end of the previous year.

One of the most important monetary and economic indicators, namely the foreign exchange reserve at the Central Bank, rose sharply, exceeding $12 billion, which strengthened public confidence in the local currency and the stability of the exchange rate of the dinar as pegged to the dollar.

Expatriate remittances, which form a major source of income and foreign exchange, rose by 4 per cent, an indication that Jordanian expatriates abroad became more confident that their homeland is in good shape and will not undergo the troubles that plagued Arab Spring countries.

The share price index at the Amman Stock Exchange, considered to be a barometer for general confidence, registered tangible gains and rose during the year by 7 per cent, beating inflation.

On the negative side, public debt rose by around JD2 billion. The major part of the additional debt is foreign debt.

Debt rose as a natural result of the chronic budget deficit, which undertakes huge expenditure, far exceeding its own means and the ability of the people to finance it.

The government failed to take some difficult decisions, as promised. No independent governmental units were written off or absorbed, especially those that outlived their objectives, such as the privatisation unit.

Likewise, the government failed to implement the reforms it suggested to prevent waste through costly subsidies by directing them only to those who need and deserve them. Bread and fodder are prominent examples.

The balance of trade moved in the wrong direction. Exports stagnated while imports continued to rise, causing deficit to soar. So much so that the proceeds of national exports hardly cover 38 per cent of the value of imports.

The tourism sector registered a negative growth rate. Receipts from tourists dropped by 4.2 per cent. Unemployment remained at the high level of 14 per cent, especially among the youth and female job seekers.

But what about the new year?

Preliminary estimates put economic growth at 3.5 per cent, inflation at 4.5 per cent, predict that Central Bank reserves of foreign exchange will continue to rise, the current account deficit will narrow while budget deficit and public debt will continue to soar.

Challenges facing Jordan during 2014 are not very different from those that faced the country in 2013. They include: the consequences and possible spillover of the trouble in Syria, the relatively extensive influx of Syrian refugees, an ineffective strategy for energy, interruption of the flow of Egyptian gas, dealing with the budget deficit and excess debt and, last but not least, imposing the will of the state and enforcing the law.

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