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Economic Overview

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

The Jordanian economy, severely impacted by the refugee influx and grown increasing dependence on international grants that followed the Syrian and subsequent refugee crisis, had to deal with the global effect of the COVID pandemic since 2020. Consequently, its GDP growth amounted to -1.6% in 2020, from +2% in 2019. Nevertheless, growth came back in 2021 with a 2% increase of the country GDP (IMF, October 2021). According to the updated IMF forecasts from October 2021, GDP growth is expected to remain at 2% this year and then to 3.1% in 2023, subject to the post-pandemic global economic recovery.

Jordan is one of the few countries in the Middle East that does not rely as much on its natural resources due to scarcity of hydrocarbon and water resources. Nevertheless, it is also one of the most committed countries to financial reforms within its region (privatisation, tax reforms, opening of the banking sector, etc.). Jordan has implemented reforms under the terms of the extended fund facility that it negotiated with the IMF in 2016 and the subsequent fiscal consolidation policies brought down the government budget balance to a deficit of 3.2% of GDP in 2019, 2.9% in 2020 and 2.4% in 2021, from 3.6% in 2018. This trend is expected to continue with government balance anticipated to fall to a deficit of 1.6% by 2022 but then -2.2% in 2023. The IMF estimates that public debt was 88% of GDP in 2020 and 90.9% in 2021 and will stabilise in 2022 (90.6%) and should reduce to 88.4% in 2023. At the same time, Jordan renewed its agreement with the IMF at the start of 2020 on a two-year arrangement under the extended fund facility for around USD 1.3 billion. Jordan adopted a comprehensive IMF-backed income tax law at the end of 2018, which provides for a gradual increase of corporate tax rates from 2019 to 2024. Industrial, pharmaceutical and clothing activities, that currently benefit from reduced tax rates, will be imposed at the same rate as the rest of businesses as of 2024. However, the effective corporate tax is even higher as Jordan introduced at the start of 2019 a new national contribution tax on the taxable income of all corporations in Jordan, at varying rates from 1% to 7%, as part of its efforts to pay off the national debt. While Jordan's macroeconomic dynamics are set to improve, global financing conditions and regional instability continue to challenge the economic growth, limiting the scope of foreign investment. Jordan's current account deficit, 8% of GDP in 2020, and 8.9% in 2021 is expected to narrow to 4.4% of GDP in 2022 and 3.2% in 2023. The country's external position remains fragile given considerable financing requirements. Inflation fell to 0.4% in 2020 from 0.7% a year earlier but increased to 1.6% in 2021 and is expected to pick up to 2% in 2022 and 2.5% in 2023 amid tight monetary policies and sluggish demand.

Modest economic growth, high unemployment and limited job creation raise concerns about the extent of poverty reduction that can be achieved. Despite low economic contraction in 2020, household recovery may be slow and uneven. Larger households, young, female, informal workers and those in interaction-intensive services sectors will likely see depressed incomes for longer (world Bank, 2022). In 2022, the country’s most immediate challenge remains related to the economic, social and public health impacts of the COVID-19 pandemic. In addition to the humanitarian and financial crisis caused by the influx of Syrian refugees, Jordan also has to deal with a high unemployment rate, that rose further to 22.7% by the end of 2020 (IMF, 2021), a high poverty rate and high levels of inequality. In the long-term, the Jordan Unemployment Rate is projected to trend around 24% in 2022 and 20% in 2023, according to the Trading Economics econometric models (Trading Economics, 2022). Unemployment affects university degree holders and women much more negatively, further contributing to inequalities. However, Jordan's development has benefited from international aid as the country has been able to become a central element of stability in the Near and Middle East, ensuring peace on the borders it shares with its neighbouring countries.

 
Main Indicators 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 44.5743.76e45.3447.5050.20
GDP (Constant Prices, Annual % Change) 2.0e-1.6e2.02.73.1
GDP per Capita (USD) 4,426e4,2864,3944,5654,793
General Government Balance (in % of GDP) -3.2-2.9-2.4-1.6-2.2
General Government Gross Debt (in % of GDP) 78.088.0e90.990.688.4
Inflation Rate (%) 0.70.41.62.02.5
Unemployment Rate (% of the Labour Force) 19.122.70.00.00.0
Current Account (billions USD) -0.95-3.49e-4.05-2.11-1.62
Current Account (in % of GDP) -2.1-8.0e-8.9-4.4-3.2

Source: IMF – World Economic Outlook Database , October 2021

Note: (e) Estimated Data

Country Risk

See the country risk analysis provided by La Coface.

 

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Main Sectors of Industry

Agriculture represented 5.2% of the GDP and employed 2.5% of the workforce in 2021 (World Bank, 2022). The lack of water creates an obstacle to agricultural development. The principal crops are wheat, barley, lentil, tomato, cucumbers, eggplant, citrus fruits, olives, strawberries and grapes. Phosphates and potassium are the only natural resources of the country. Six uranium deposits, accounting for 3% of the world's reserves, were discovered in recent years and the country has signed around 20 international agreements in the field of atomic energy.

Industry contributed 23.9% of the GDP and employed around 24.5% of the workforce in 2021 (World Bank, 2022). Mining and quarrying (mainly phosphate and potash) are among the major industries. The manufacturing sector is rather limited and dominated by textiles, a sector presently in a state of crisis due to international competition.

The services sector, which employed 73.1% of the workforce, contributed 61.6% of the GDP in 2022 (World Bank,2022). Communication technologies and financial services are particularly active in the country. The sectors of distribution and tourism infrastructure also contribute substantially to GDP, although they experienced a slowdown in recent years. The construction and transport sectors are constantly expanding.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 2.5 24.5 73.1
Value Added (in % of GDP) 5.2 23.9 61.6
Value Added (Annual % Change) 1.6 -2.4 -1.0

Source: World Bank - Latest available data.

 
Monetary Indicators 20162017201820192020
Jordanian Dinar (JOD) - Average Annual Exchange Rate For 1 USD 0.710.710.710.700.71

Source: World Bank - Latest available data.

 

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Foreign Trade

Jordan is very open to international trade, so much so that there is a dependence on foreign capital; however, its relative share of GDP has diminished considerably after 2014 and was standing in 2020 at 65.4% (World Bank, 2022). Exports are spearheaded by the textile industry, followed by the chemical and mining sectors (fertiliser, medicine, potash and phosphate). Jordan mainly imports machinery and transport equipment, gas, crude and petroleum products, food, manufactured chemicals and electrical machines.

The United States was by far the main destination for Jordanian exports (25%), followed by Saudi Arabia and India (12% respectively), Iraq and the United Arab Emirates. China (16%) and Saudi Arabia (13%) were the main supplier of goods in Jordan remaining ahead of the United States (8.6%), Germany (4.5%) and the UEA (3.8%). Jordan is a member of the WTO and signed a free-trade agreement (FTA) with the U.S in December 2001, allowing the removal of customs duties on the majority of goods and services since 2010 when it was fully implemented. Jordan has also signed an Agreement of Association with the EU. In 2016, the EU announced that it would facilitate the entry of Jordanian exports in order to support the economy and integration of Syrian refugees. Jordan cancelled its free-trade agreement with Turkey at the end of 2018, citing its feasibility and negative impact on local manufacturing. This agreement was replaced by another free-trade deal at the end of 2019. In addition to the United States, Jordan is also party to bilateral trade agreements with Canada and Singapore and is a signatory to several regional trade agreements including the European Free Trade Association (Norway, Switzerland, Liechtenstein), Greater Arab Free Trade Agreement (GAFTA), and Aghadir Agreement (Egypt, Morocco, Tunisia) which is connected to the Association Agreement (EU).

Jordan's trade balance is structurally in deficit, mainly because of the country's reliance on hydrocarbon imports. The exports of goods amounts to USD 7.7 billion and the imports of goods to USD 19.5 billion in 2021. The Kingdom's trade deficit increased during the first 11 months of 2021 by 29.2 per cent to reach JD7.824 billion (11.03 billion USD), compared with the same period in 2020, where it stood at JD6.056 billion or 8.54 billion USD (Jordanian Department of Statistics, January 2022). The volume of total exports in the January-November period of 2021 increased by 18.3 per cent to JD5.997 billion (8.45 billion USD), compared with the same period of 2020. The percentage of total export coverage for imports in the first 11 months of 2021 stood at 43.4 per cent compared with 45.6 per cent in the same period of 2020, marking a drop of 2.2 per cent. (Jordanian Department of Statistics & Jordan Times, January 2022).

 
Foreign Trade Values 20162017201820192020
Imports of Goods (million USD) 19,20720,49820,31019,17017,011
Exports of Goods (million USD) 7,5097,5117,7508,3177,943
Imports of Services (million USD) 4,4384,6274,7324,7102,903
Exports of Services (million USD) 6,2336,3897,0827,7182,322

Source: World Trade Organisation (WTO) ; Latest available data

Foreign Trade Indicators 20162017201820192020
Foreign Trade (in % of GDP) 88.790.288.585.765.4
Trade Balance (million USD) -9,588-10,695-10,302-8,887n/a
Trade Balance (Including Service) (million USD) -8,292-8,735-7,823-5,753n/a
Imports of Goods and Services (Annual % Change) -3.02.5-6.6-3.1-18.2
Exports of Goods and Services (Annual % Change) -3.01.70.96.5-35.8
Imports of Goods and Services (in % of GDP) 54.355.653.449.441.7
Exports of Goods and Services (in % of GDP) 34.434.535.236.323.7

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20212022 (e)2023 (e)2024 (e)2025 (e)
Volume of exports of goods and services (Annual % change) 5.316.96.54.73.6
Volume of imports of goods and services (Annual % change) 1.79.82.43.03.1

Source: IMF, World Economic Outlook ; Latest available data

Note: (e) Estimated Data

 
International Economic Cooperation
The Jordanian economy is very open. The country is part of the Greater Arab Free Trade Area(GAFTA), a pact of the Arab League entered into force in January 2005 which aims to form an Arabic free trade area. It has also signed bilateral free trade agreements with most of the countries of the Arab League. Jordan has also signed an agreement with the European Free Trade Association (EFTA), the United States and Singapore. Jordan has signed the Euro-Mediterranean Association Agreement which provides for a free trade area between the European Union and the other signatory countries. Finally, Jordan is a member of the Agadir agreement which provides for a system of free trade between Jordan, Tunisia and Egypt. Jordan also signed a Free Trade Agreement with Canada.
 

Main Partner Countries

Main Customers
(% of Exports)
2020
United States 22.1%
India 10.9%
Saudi Arabia 10.5%
United Arab Emirates 4.4%
Switzerland 3.1%
See More Countries 49.0%
Main Suppliers
(% of Imports)
2020
China 15.9%
Saudi Arabia 12.3%
United States 8.3%
Germany 4.3%
United Arab Emirates 3.7%
See More Countries 55.4%

Source: Comtrade, Latest Available Data

 

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Political Outline

Current Political Leaders
King: Abdullah II (since 7 February 1999) – hereditary
Prime Minister: Bisher Al-Khasawneh (since 12 October 2020)
Next Election Dates
House of Representatives: 2024
Main Political Parties
Jordan is an absolute monarchy and the parliament maintains a limited role in governance of the country. Political parties were not legalised in the country until 1992. The Islamic Action Front (IAF), a right-wing opposition force and faction of the Muslim Brotherhood in Jordan, dominates political spheres and obtained 15 seats in the 2016 elections, after having boycotted the previous two in 2010 and 2013, but only 5 seats at the latest election. Jordanian politics tend to be influenced by tribal or familial politics rather than by formal political parties. Some major parties include:

- Islamic Centrist Party: centre, moderate, promotes social reform
- Zamzam: centre-right, islamic democracy
- National Current Party: centre, nationalist
Executive Power
The head of state is the King. The monarchy is hereditary. The King enjoys executive powers. The King signs and executes all laws. He appoints and dismisses all judges by decree, approves amendments to the constitution and has the right to declare war. The King appoints the Prime Minister as head of the government, having no fixed term of office. The cabinet, led by the Prime Minister, is appointed by the King.
Legislative Power
The legislature is bicameral in Jordan. Its parliament consists of: the Senate having 65 members who are appointed by the King to serve four-year terms; and the House of Representatives having 130 members elected by popular vote on the basis of proportional representation to serve four-year terms. The King’s power of veto may be overridden by a two-thirds vote of both houses of the National Assembly.
 

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COVID-19 Country Response

COVID-19 epidemic evolution
To find out about the latest status of the COVID19 pandemic evolution and the most up-to-date statistics on the COVID19 disease in Jordan, please visit the Jordanian Ministry of Health Corona Virus website with the official data.

For the international outlook you can consult the latest situation reports published by the World Health Organisation as well as the global daily statistics on the coronavirus pandemic evolution including data on confirmed cases and deaths by country.
Sanitary measures
To find out about the latest public health situation in Jordan and the current sanitary measures in vigour, please consult the COVID-19 Guide and the Ministry of Health’s webpage on quarantine
Travel restrictions
The COVID-19 situation, including the spread of new variants, evolves rapidly and differs from country to country. All travelers need to pay close attention to the conditions at their destination before traveling. Regularly updated information for all countries with regards to Covid-19 related travel restrictions in place including entry regulations, flight bans, test requirements and quarantine is available on TravelDoc Infopage.
It is also highly recommended to consult COVID-19 Travel Regulations Map provided and updated on the daily basis by IATA.
The US government website of Centers of Disease Control and Prevention provides COVID-19 Travel Recommendations by Destination.

The UK Foreign travel advice also provides travelling abroad advice for all countries, including the latest information on coronavirus, safety and security, entry requirements and travel warnings.
Import & export restrictions
For information on all the measures applicable to movement of goods during the period of sanitary emergency due to the COVID-19 outbreak (including eventual restrictions on imports and exports, if applicable), follow the messages on the website of EY’s webpage  Jordan announces economic measures to reduce the impact of COVID-19. The Ministry of Industry, Trade and Supply has stopped traders from exporting or re-exporting food products.

For a general overview of trade restrictions due to COVID-19 pandemic, please consult the section dedicated to Jordan on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
Economic recovery plan
For information on the economic recovery scheme put in place by the Jordanian government to address the impact of the COVID19 pandemic on the Jordanian economy, refer to EY’s webpage  Jordan announces economic measures to reduce the impact of COVID-19.

For the general overview of the key economic policy responses to the COVID-19 outbreak (fiscal, monetary and macroeconomic) taken by the Jordanian government to limit the socio-economic impact of the COVID-19 pandemic, please consult the section dedicated to Jordan in the IMF’s Policy Tracker platform.
Support plan for businesses
For information on the local business support scheme established by the Jordanian government to help small and medium-sized companies to deal with the economic impacts of the COVID19 epidemic on their activity, refer to EY’s webpage  Jordan announces economic measures to reduce the impact of COVID-19

For a general overview of international SME support policy responses to the COVID-19 outbreak refer to the World Bank's Map of SME-Support Measures in Response to COVID-19.
Support plan for exporters
There are no specific support plans for exporters in Jordan so far. For future possible up-to-date information please visit the website of the Ministry of Industry, Trade and Supply.
 

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