Despite a difficult regional context, the Qatar National Bank (QNB) Group said it expected Jordan’s real GDP growth to reach 4 percent over 2015, accelerate to 4.3 percent in 2016, and 4.5 percent in 2017.
Jordan’s economy would continue to recover on the back of continued economic reforms, stronger construction activity and mining exports, as well as higher government investment, QNB said in a statement. Sustained lower energy prices were also likely to increase competitiveness and domestic demand, it added.
In April, the IMF forecast a growth of 3.8 percent in Jordan’s GDP over 2015, reaching 4.5 percent in 2016.
QNB said it expected Consumer Price Index inflation to slow to 0.8 percent this year on the pass-through of lower oil prices, but to recover between 2016 and 2017.
“Lower global oil prices are expected to lead to negative foreign inflation in 2015, which will be counterbalanced by the continued presence of refugees in Jordan adding to domestic inflation,” QNB said. “Overall inflation will pick up in 2016-2017 on a gradual pick in foreign inflation due to the expected recovery in oil prices and stronger domestic demand.”
Furthermore, the financial institution said lower oil prices would narrow the current account deficit in 2015, and the deficit will then widen between 2016 and 2017 once oil prices rebound. “We expect a large reduction in the energy import bill, supported by the lower oil prices and the start of LNG imports, following the launch of the LNG terminal at the port of Aqaba, starting in May 2015,” QNB said.
It also said it expected a new bilateral agreement with India for Jordanian phosphate exports, as well as a projected recovery in the price of potash, both leading to higher export growth.
QNB expected lending growth to rebound in 2015 (7.4 percent), 2016 (8.9 percent), and 2017 (9.5 percent) as lower government bond rates and reduced government financing needs push banks to increase their lending book. “Profitability should rise on further declines in non-performing loans and continued high capitalization ratios,” the QNB said.