Country Report Jordan

Summary

The king, Abdullah II, is likely to remain in power, supported by the loyal and effective armed forces.
The opposition Islamic Action Front (IAF) is set to become more confrontational, with hawks within the party increasingly in the ascendancy. However, its influence will be weakened by continued in-fighting.
The king will continue to pursue an active diplomatic approach to resolving the region's unstable political scene, but his influence will remain limited, and his pro-Western orientation is unpopular with the population at large.
The government will continue to pursue economic liberalisation, but, mindful of any potential public backlash, progress will be relatively slow.
The fiscal deficit will widen in 2008-09, and the government will remain heavily dependent on foreign official grants.
We have revised our inflation forecast upwards, after raising our projections for global prices for both oil and food. We now expect average consumer price inflation to reach 13.6% in 2008, before falling to 5% in 2009.
Jordan's current-account outlook has worsened, after we raised our import spending projections in line with our higher oil price forecast. We now forecast that the current account will return a deficit of 23% of GDP in 2008-09.

Jordan has marked the 60th anniversary of Israel's creation with opposition protests and arguments over the public assembly law.
King Abdullah has presented a largely upbeat picture of the country's economic situation in a speech to mark Independence Day. However, with fuel prices rising once again in May, the IAF has warned of unrest.
The agreement between Lebanon's various opposing factions in Doha, Qatar in May could help accelerate Jordan's efforts to strengthen ties with Syria. However, differences over Hizbullah are likely to persist.
The IMF has praised Jordan's recent economic performance, but has called for greater budgetary restraint.
Import spending surged by 38% year on year in the first quarter of 2008, led by a 126% increase in the oil import bill, raising concerns over the potential scale of the trade deficit this year.
The government has pushed ahead with plans to expand wind and solar power-generation capacity and has signed an agreement with France, which will assist Jordan in the building of nuclear reactors.