Standard Chartered dispatched some of its top regional analysts to Amman last month to brief its clients on the bank’s macro-economic outlook for Jordan and the wider region. Their overall assessment was fairly sunny, despite the obvious challenges that continue to weigh down countries in the area.
Sayem Ali, Standard Chartered senior economist for MENA, said in a statement that growth in the region is projected to accelerate to 4.6 percent in 2015, compared to 3.8 percent this year. This growth will be led by higher investment spending in GCC states and rising investor confidence in Egypt, Jordan, and Iraq.
As for declining oil prices, he said this would provide a “significant boost” to the oil importing countries, as well as additional fiscal and foreign exchange resources to scale-up investment spending.
However, with the notable exception of the UAE, Jordan, and Morocco, he warned that all MENA economies were falling behind in the WEF Global Competitiveness Index due to the slow pace of economic, political, and regulatory reforms.
As for Standard Chartered’s specific take on Jordan, it said that despite regional unrest, falling tourist arrivals, and a persistent energy crisis, the Kingdom’s economy posted strong growth of 3.2 percent in the fourth quarter of this year, versus 2.8 percent in 2013. Unemployment also fell to 12 percent in June from 12.6 percent in the same month last year. Tough reforms under the $2 billion IMF program have also started to yield results, and investor confidence has increased on improving credit metrics and large aid inflows from GCC states.
Standard Chartered forecasted that real GDP growth will accelerate to 3.5 percent this year, from 2.8 percent in 2013. Financial assistance from the GCC states should also support growth thanks to the $5 billion fund for investment projects in Jordan. The budget outlines aggressive spending plans for this year, as investment increased by 25 percent year-on-year to deal with the energy crisis and to create new jobs.
The key risk to Jordan’s economy is proliferating violence in the region, the bank said, adding that the sharp increase in refugees is straining limited water, food, and energy resources. Several war-torn countries are also key export markets for Jordan; the conflict in the region will likely have a significant effect on Jordan’s growth. The tourism industry, which accounts for up to 15 percent of GDP, has been the hardest hit as tourist arrivals declined by more than 14 percent last year.