Low economic growth projected

Projections for economic growth in 2015 started on the high side.

The highest projected rate was presented by the minister of finance in his budget speech addressed to Parliament a year ago.

More estimates were produced by the International Monetary Fund and the World Bank. Both started with high figures but were, later on, revised down, one time after another.

According to the Department of Statistics, the growth rate of the gross domestic product in the first quarter of this year was 2 per cent. It rose in the second quarter to 2.4 per cent.

Both rates are too low to encourage exaggeration in estimating growth rate on the year as a whole.

One can venture to say that, at best, the real growth rate of GDP in 2015 as a whole will not exceed 2.5 per cent.

In order for this rate to be achieved, the actual growth rate in the third quarter should rise to 2.7 per cent and in the fourth quarter to 3 per cent, so that the yearly average would reach 2.5 per cent.

These required rates of growth in the third and fourth quarters are on the high side of projections.

The problem is not confined only to low growth rates of most economic sectors of the economy, but also in the negative growth of important sectors such as hospitality, construction and agriculture.

Of course, there are always justifications and excuses that can be presented to explain the low economic growth. 

For some time, officials used to cite the world financial and economic crisis, which broke in 2009.

Then came the so-called Arab Spring, and the higher risks and uncertainty that came with it, and finally we got civil wars and terrorist acts in many Arab countries, closest to us Iraq and Syria, and farther off, Libya and Yemen.

There are reasons to believe that some economic growth will take place in 2016.

As usual, the Ministry of Finance will start with the most optimistic estimate of 3.7 per cent, to be mentioned in its first draft of the budget speech, which will soon be presented to Parliament.

The IMF and the World Bank are expected to go along and give other estimates on the high side, to be updated and revised down later on due to preliminary results.

Under the present domestic and regional circumstances, the achievement of 3 per cent growth in 2016 is a practical estimate with reasonable chances of success, unless the region witnesses a pleasant surprise that may raise this rate, or a setback that would reduce the projected rate.

Pleasant surprises are, of course, in short supply.

In this respect, it is worth mentioning that the authors of Jordan’s Ten Year Vision were more optimistic than all others. They estimated the growth rate to hit 4.55 per cent in 2015 and to reach 4.67 per cent in 2016.

It is not known on what assumptions they made this high projection, which is rather wishful thinking.

In fact, they estimated the growth rate in the base year 2014 to be 3.1 per cent, even though the actual figures were almost ready, with growth rate not exceeding 2 per cent.

On a last note, Jordan’s economic performance is far better than that of any other country in the region, thanks to its security and stability.