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Research Says Exports Will Boost Jordan GDP

Jordan’s real GDP is forecast to grow at 3% in 2018 and 3.2% in 2019.Jordan’s real GDP is forecast to grow at 3% in 2018 and 3.2% in 2019.

Jordan’s economy which has been straddled with mounting debt and the burden of caring for the influx of refugees from the conflict in neighboring Syria since 2011, will see a moderate acceleration over the coming quarters, helped by a rise in exports and strengthening external demand.

Fiscal consolidation in Jordan, however will weigh on household consumption, preventing a stronger economic recovery, BMI research, a unit of the Fitch group said in its latest research note. Overall, Jordan’s real GDP is forecast to grow at 3% in 2018 and 3.2% in 2019. The kingdom’s economy is projected to expand by 2.4% this year, Yahoo reported.

BMI’s projections are quite similar to the Washington-based International Monetary Fund, which estimates Jordan’s GDP will grow by 2.3% this year after expanding 2% in 2016.

“We expect rising exports to drive stronger growth in Jordan over the coming quarters, boosted by increasing external demand and improving regional stability,” BMI said. “This expansion will only be gradual, however, as consumption remains sluggish amid the implementation of fiscal consolidation measures.”

The IMF projects Jordanian current account deficit to the narrow this year after it grew to 12.6% last year, reflecting the challenging regional conditions including the Syrian refugee crisis, which the country had to deal with for several years.

However, the pressure on economy is expected to ease a little with its main exports including chemicals, textiles and agricultural products picking up over the coming quarters as demand from key markets rises.

The kingdom is expected to benefit from gradually improving economic conditions across the region, which altogether accounted for 29% of its total exports in 2016.

In terms of services exports, BMI said it expects the economic uptick to be driven by inbound tourism. “Tourism revenues were up 12.7% over the January-October 2017 period, and we expect growth in this segment to remain robust in 2018,” BMI noted.

The ongoing implementation of austerity measures, as stipulated under Jordan’s three-year Extended Fund Facility arrangement with the IMF, will continue to weigh on consumption and investment in Jordan over the coming quarters. The government is cutting back on some subsidies, limiting general sales tax and custom duty exemptions, and broadening the income tax base, which will affect households’ ability to spend, according to BMI report.

BMI estimates unemployment to come in at 15% of the total labor force in 2018, from a projected 15.3% in 2017.

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