After a decade or so in the doldrums, things are finally looking up for Jordan’s economy. Evidence from both the global and regional arena warrant saying that Jordan is moving towards a growth cycle, leaving the bottleneck of the last decade behind. According to Goldman Sachs, real growth globally is expected to hit 4 percent this year. This is accompanied by a promising growth in productivity and a downward sloping unemployment rate; emerging markets especially in the case of China are expected to exhibit much more positive growth signs in the year 2018.
However, the issue of inflation rates, which are below the targets of central banks around the world, remains a challenge, albeit not a substantial one. Among other potential problems for global growth is both the shift in trade policy of the United States towards protectionism and the outcome of the Italian elections.
In the same context, the IMF’s World Economic Outlook report expects 2018’s global growth rate to reach 3.7 percent. Emerging markets are expected to reach 4.9 percent, however. China and India are seen leading economic growth globally with expected growth rates of 6.5 and 7.4 percent, respectively.
As for the MENA region, the IMF expects real growth to reach 3.2 percent. This is one percentage point over the expected rate for the year 2017. The important fact here is that for the first time in 10 years the per capita income is expected to have a positive growth rate, where it was almost zero over the last couple of years and negative between 2009-2015.
To this end, it looks that the main assumption of Jordan’s budget of a 3 percent growth rate is not only achievable but can also be overridden to better results. This requires the government to follow through with its stated commitment to cooperate with the private sector. However, it’s more important to start substantial steps toward improving Jordan’s position in the Doing Business and Global Competitiveness reports.
In addition, the 2018 budget structure proves that the only way towards achieving its target in reducing the fiscal deficit to JD 543 million is not through more cost cutting, as we have almost exploited all means of cost cutting, but improving the revenue base. This does not mean increasing taxes on the corporates or individuals who are already paying. It means that the country should plan for better growth where new businesses are introduced, and current ones are expanded, hence new jobs are created.
This year looks full of promise for Jordan’s economy, not only because of the positive expectations globally, but also because of the fact that the economic and political scene in the region looks positive. I hope we don’t fail to capitalize on the opportunities that lie ahead.