Country Report Jordan February 2009

Outlook for 2009-10

• 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. However, in the near term the government will focus its efforts on limiting the fallout from Israel's incursion into the Gaza Strip.
• Jordan is forecast to return wide fiscal deficits, as tax receipts are depressed by slower economic growth and the government retains an expansionary fiscal stance. As a result, Jordan will remain heavily 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 14.9% in 2008 to an average of 4.7% in 2009-10.
• We have lowered our real GDP growth forecast, as the prospects for Jordan's services sector, including tourism, have worsened. We now expect growth to slow from an estimated 5.8% in 2008 to 3.5% in 2009 and 3% in 2010.
• Jordan's current-account deficit will narrow over the outlook period, as the cost of imported commodities falls sharply from the 2008 highs. Nevertheless, the deficit will remain wide, at US$2.7bn in 2009 and US$2.5bn in 2010.

Monthly review

• The government has successfully negotiated the spike in tension that accompanied Israel's incursion into the Gaza Strip, and the new US administration has been keen to include Jordan in its efforts to restart the peace process.
• Jordan has announced that it will seek to introduce a fiscal stimulus during 2009, although it is likely to be relatively modest in scope given the country's frail public finances.
• The government has announced several measures to assist the tourism sector, including lowering the hotel tax and easing visa requirements for Chinese and Indian citizens.
• According to the latest official data, average inflation in 2008 reached 14.9%, considerably up from 5.4% in 2007. However, the rise masks a decline in the consumer price index in the final quarter of the year.
• The Greater Amman Municipality has sought to revive plans for the Wadi Abdoun development scheme, but, having previously been accused of seeking to sell the land too cheaply, it is now advocating a PPP model.
• In a further sign of improving bilateral ties, Jordan has eased entry requirements for Iraqis, with preferential treatment offered to Iraqis seeking to invest in Jordan.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60;48;70
NAICS Code: 52;517;72