Country Report Jordan December 2008

Summary

Power in Jordan remains firmly in the hands of the king, Abdullah II, who is expected to retain the loyal support of the army and the security services.
The government will prioritise economic reform over political liberalisation, as it seeks to manage popular frustration at low living standards and the fall-out from the troubles in the Palestinian Territories.
The king will continue to pursue an active diplomatic approach to resolving the region's political disputes, but his influence will be limited and his pro-Western orientation is unpopular with the majority of Jordanians.
The fiscal deficit will remain wide in 2009-10, as slowing economic growth restrains tax receipts and large outlays on welfare keep spending growth high, ensuring that the government continues to be reliant on foreign grants.
Inflation will decline sharply over the outlook period, in the wake of lower global commodity prices and a stronger US dollar. As a result, inflation is likely to fall from an estimated 15.9% in 2008 to an average of 4.2% in 2009-10.
Real GDP growth will be depressed by weak domestic demand and the recession in the US (Jordan's largest export market). As a result, we have lowered our growth forecast to 4.4% in 2009 and 4% in 2010.
We have revised downwards our current-account deficit forecast, in response to a lowering of our global oil and foodstuffs price projections. However, the deficit will remain wide, at US$3.7bn in 2009 and US$3.2bn in 2010.

The opposition Muslim Brotherhood has sought to play down fresh reports of renewed infighting within the movement, and has instead sought to divert attention to a plan to alleviate the plight of Palestinians in the Gaza Strip.
The IMF has released an "Aide-Memoire" on its staff visit to Jordan, in which it has lowered its forecast for economic growth in 2009, and again called for greater fiscal restraint.
Parliament has passed the 2009 budget, after calling for a 10% reduction in recurrent spending. However, civil service salaries, promotions and pensions, as well as the security forces, are exempt from this constraint.
Citing the more benign inflationary environment, the Central Bank of Jordan has lowered interest rates by 50 basis points, and concomitantly reduced commercial banks' reserve requirement.
In October the consumer price index recorded its largest monthly decline since May 2001, as the sharp drop in international commodity prices began to feed through into the domestic economy.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60
NAICS Code: 52