Economic Overview

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.  Nevertheless, its GDP growth amounted to 2.2% in 2021 and 2.5% the following year. Last year, the country’s economy grew an estimated 2.6% according to the IMF, supported by private consumption. The IMF outlook points to a growth rate of 2.7% in 2024 and 3% the following year, although the Israel-Hamas conflict may jeopardize Jordan’s growth prospects. The risk of the conflict directly threatening Jordan's exports, energy, water, or food supply is mitigated by long-term gas contracts, alternative trade routes, supply arrangements, and strategic reserves of fuel and wheat. Nevertheless, growth might decelerate in 2024 due to heightened political uncertainty and expected decreases in tourism inflows, particularly from the U.S. and Europe.

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.). Fiscal consolidation should persist in accordance with IMF program goals. Economic expansion and tax collection reforms, such as e-invoicing and track-and-trace measures for alcohol, are projected to boost tax revenues (constituting 70% of total revenues). External grants are forecasted to hit 2% of GDP in 2024, notably with the US, Jordan’s primary external contributor, elevating its aid to USD 1.45 billion annually for 2024-2029. The IMF estimated the general government deficit at 4.4% of GDP in 2023, with a stable outlook over the forecast horizon. The overall government debt, which consolidates central government debt holdings of the Social Security Investment Fund (SSIF), along with the debt of the Water Authority of Jordan (WAJ) and NEPCO guaranteed debt, stood at 93.8% of GDP at the end of 2023, slightly down from 94.1% in 2022. The IMF anticipates a gradual decrease in debt, with projections indicating it will decline to 89.5% by 2025. Meanwhile, the inflation rate was relatively low in 2023 (2.7%) and should hover around the same percentage in the short term. Overall, Jordan receives substantial financial and technical support from both multilateral and bilateral partners, including recent announcements of financial assistance from the UAE, Germany, and the EU.

Jordan faces significant challenges such as high unemployment, accessibility to affordable basic goods and services, and economic inequality. In addition to Palestinian refugees, Jordan has been contending with a substantial influx of refugees, notably from Syria, which could further strain already limited resources. Jordan also has to deal with a high unemployment rate, that rose further to 19.2% by the end of 2022 (World Bank), a high poverty rate and high levels of inequality. Unemployment affects university degree holders and women much more negatively, further contributing to inequalities.

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 is estimated at 86% (World Bank, latest data available). Exports are spearheaded by the textile industry, followed by the chemical and mining sectors (fertiliser, medicine, potash and phosphate). Jordan mainly imports petroleum oils, gold, motor cars, and fabrics (data Comtrade).

The United States was by far the main destination for Jordanian exports (20% of all exports in 2022), followed by India (14.6%), Saudi Arabia (9.9%), Iraq (7.5%), Indonesia (2.7%), and the United Arab Emirates (2.7%). On the other hand, China (15.3%), Saudi Arabia (14.9%), United Arab Emirates (7.8%), United States (5.5%), India (5.1%) were the main suppliers in 2022 (data Comtrade). Jordan is a member of the WTO and signed a free-trade agreement with the U.S in 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 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 amounted to USD 12.3 billion and the imports to USD 27.2 billion in 2022, up by 32.3% and 26.6% year-on-year, respectively (data WTO). However, the country is a net service exporter (USD 7.9 billion in exports against USD 5.7 billion in imports in 2022). According to the Jordan Department of Statistics, the value of exports in the first eleven months of 2023 reached JOD 8,221 million (of which 615 million of re-exports), whereas imports stood at JOD 16,952 million.