Country Report Jordan January 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's fiscal outlook has deteriorated, as the economic situation has worsened, which will depress domestic tax receipts. As a result, we expect the government to 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 5% in 2009-10.
• Real GDP growth will be depressed by weak domestic demand and the recession in the US (Jordan's largest export market), causing the rate of growth to slow from an estimated 5.8% in 2007 to 4.4% in 2009 and 4% in 2010.
• We have revised down our current-account deficit forecast, in response to a lowering of our global oil price projections. However, the deficit will remain wide, at US$2.7bn in 2009 and US$2.5bn in 2010.

Monthly review

• The Israeli assault on the Gaza Strip has led to a furious backlash in Jordan, with the Israeli embassy a target for demonstrators. The king has sought to limit the fallout locally, but has proven powerless to quell the conflict.
• The head of Jordanian intelligence, Mohammed al-Dahabi, has left his post after talks he was leading with Hamas were abandoned once the truce between the Palestinian group and Israel began to unravel in November.
• Parliament has rejected a government plan to finance an agriculture programme through the central budget. Instead, it has passed a new tax on electricity and telecoms operators to cover the cost.
• As we expected, the cabinet has approved a law that will postpone the ending of fixed rents to beyond the originally envisaged date of end-2010.
• Real GDP growth reached 6.5% in the third quarter of 2008, as manufacturing and the financial sector continued to hold up well. However, industrial production showed signs of softening as the year progressed.
• An agreement has been signed with Shell to develop Jordan's large reserves of oil shale. Although production remains a long way off, the envisaged project is far larger in scale than previous oil shale deals signed by Jordan.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60;47;48;49;37;65
NAICS Code: 52;48;517;22;336;53

This report covers the following industry codes:
SIC Code: 60;47;48;49;37;65
NAICS Code: 52;48;517;22;336;53