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Jordan’s per capita income ‘incorrect’

Nov 06,2016 - Last updated at Nov 06,2016

According to Al Rai newspaper of October 26, the International Monetary Fund (IMF) placed Jordan on the 10th position in the per capita share of the gross domestic product. 

The IMF has reportedly stated that this share is currently $5506.

These figures are incorrect.

Since GDP in Jordan is not more than $39.5 billion or JD28 billion, the IMF must have assumed that Jordan’s population amounts to 7.2 million.

The most recent data, according to the census conducted last year, indicates that Jordan’s population amounts to 9.53 million. Some experts believe it could be much more.

The IMF has thus inflated Jordan’s per capita income by at least 32.4 per cent. Per capita income in Jordan could not therefore be more than $4,160, or JD2,950.

The above figures support Standard and Poor’s expectation that Jordan’s per capita income this year will decline by 11 per cent to stand at $4,000 only.

The IMF did not reveal whether it took into account some 1.3 million Syrian refugees who share in private consumption. The answer may radically change the picture in an undesired direction.

Let us first agree on the fact that the GDP is not the best measure for the status of an economy and the quality of life in a given country. That is why economists and social scientists search for other indicators to give the right picture.

Per capita income is even worse than GDP as a measure for the economic and social well-being. It is only an arithmetic average based on the wrong assumption that income is equally distributed among all citizens.

In fact, the richest 1 per cent of the population may get up to 25 per cent of the national income in certain countries.

At this point, we have to note that IMF is still producing very optimistic estimates of the economic growth rate in Jordan.

It talks about 2.8 per cent for this year and 3.4 per cent for the coming year, even after the Department of Statistics revealed the latest growth rate in the second quarter of this year to be 1.9 per cent only.

One can reasonably estimate that growth in the full year 2016 may not exceed 2 per cent.

It seems that IMF did not take into consideration the fact that exports are in a state of decline, a trend that also applies to expatriates remittances, tourists receipts and foreign grants.

Let us not forget that unemployment among Jordanians registered the highest rate on record since 2005, not a strong indication of a high economic growth.

Perhaps, the IMF experts believe that the agreed programme for economic reform will solve the problem of low economic growth.

In fact the programme is of an austerity nature, which may put the economic growth rate under further pressure in the short term, in the hope that the situation will be turned around towards a higher growth rate in the future.

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