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Economic Growth In Jordan

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Answer the following questions about the economy of jordan

  1.  Please provide a summary and key highlights on the first review document (attached)

The Jordanian economy largely depends mainly on tourism as well as information technology, clothing, fertilizer, phosphate mining, petroleum refining, cement and light manufacturing. In the wake of the Covid-19 pandemic, the country’s economy has been performing dismally due to stagnation of the tourism industry (which is its main economic activity) occasioned by the shutdown of borders and ports from international travelers. The country had to seek for international partners to help bail it out of economic doldrums and set the economy back on a positive growth. Here are some highlights of the current status of the country’s economy: –

  • The country had some of the least infection rates in the world. After the initial shutdown of the economy, the country had just started opening many of its industries and the economic life was starting to get back to normal. However, this is been threatened by the second wave of the pandemic which started on September 2020. The government has been taking measures to curb an escalated infection rates during the second wave period. The measures center around alleviating conditions of the poor and the vulnerable,    enabling businesses to stay open and running and extending tax breaks to the tourism sector. Despite these measures, the economy is expected to grow at a slower rate of 2.5%, unemployment rate will rise to 23% and public debts will increase to 70& of the GDP.   
  • The government is redirecting some of the policies initiated before the pandemic to reduce respond to and limit the negative effects of the pandemic. With lower domestic revenues, the government will be forced to institute minimal discretion fiscal measures, suspension of civil servants bonuses, suspended non-priority capital investments and froze creation of new public positions.
  • New measures to ensure the economy is sustained include resetting of deficit ceiling to 6% of GDP, reforming of electricity and water sectors to accommodate the current shortfalls and other reforms to strengthen employment, investment and governance.
  • Identify 3 key issues hindering economic growth in Jordan or and policies that can enable Jordan to thrive and achieve sustainable economic growth.

Three issues preventing economic growth in Jordan include: –

  1. Increasing public debt

The country has continued to borrow money to finance various initiatives aimed at combating the negative effects of Covid-19 and keep the economy stable. In order to do that, it was forced to issue two consecutive bonds of $500 million and $1.25 billion as well as $396 million emergency loan from the IMF. This dependency on foreign bonds and loans means that the country has to spend most of its income on repayment of these loans (at high interest rates). This in turn results in less money for investing in economic activities such as infrastructure projects, public service and human resource initiatives. Repayment for these loans and bonds is set to continue for a long time (decades) meaning the country will have to look for other ways to finance its development activities.

  1. Declining business activities especially in the tourism industry

The Covid-19 pandemic has resulted in diminished movement of people from one country to another due to restricted movement between countries and fear by travellers of getting infected of coronavirus. Jordan is a country that is mainly dependent on tourism as its number one contributor to its economy.  The industry, which earned the country revenues worth $5.8 billion in 2019 but has suffered from diminished arrival of international tourists as the numbers have dwindled due to the pandemic. The country also benefits from remittances of its nationals who live abroad to their relatives to spur consumer spending. These remittances have greatly reduced since the on-set of the pandemic. A combination of these two factors have led to less money flowing into the country’s economy, resulting in slower economic growth especially in consumer expenditure sectors and foreign investment.

  1. Lack of natural resources and the unstable nature of the country’s politics

The country has no valuable natural resources like its gulf neighbors who have abundant natural gas deposits. This means its revenue collection sources are limited to tourism, human resource and a modest manufacturing industry. With few financial options available for servicing its loans and financing its economic activities, the country is set to experience civil unrest as disgruntled citizens are likely to vent their anger on the government. This creates a hostile environment for any meaningful economic activity as investors are afraid to finance businesses and industries due to political and social uncertainty in the country. The bleak political situation of the country’s neighbors is also likely to impact negatively to its economic prospects.


Jordan is a country that is caught between choosing to spend its revenues on financing initiatives to alleviate the effects of Covid-19 and financing its development projects. The country will continue to experience sluggish economic growth due to slowdown in the tourism sector, reduction in foreign remittances and a volatile political environment as its public debt keeps increasing.     

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