Country Report Jordan March 2009

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 newly reshuffled cabinet 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.
Real GDP growth will fall to its lowest levels in a decade, as the outlook for Jordan's services sector, including tourism, worsen. We expect growth to slow from an estimated 5.8% in 2008 to 3.5% in 2009 and 3% in 2010.
The current-account deficit will narrow over the outlook period, as the cost of imported commodities falls sharply from their highs in 2008. Nevertheless, the deficit will remain wide, at an average of US$2.5bn in 2009-10.

A wide-ranging cabinet reshuffle has taken place, although the prime minister, Nader al-Dahabi, has retained his post, and the move is not expected to precipitate a fundamental shift in policy.
A number of clerics connected to the Muslim Brotherhood have been banned from delivering Friday sermons. The government claims the move is purely an administration matter, but the Brotherhood has rejected this.
The prospect of a new Israeli government led by the right-wing Likud leader, Binyamin Netanyahu, has raised concerns in Jordan over the future of the two-state solution for the Palestinian Territories.
A new finance minister, Bassem al-Salem, has been appointed. He will put into effect an economic stimulus package, which is likely to focus on employment, given the numbers of Jordanian expatriates returning from the Gulf.
The government's "decent housing for decent living" initiative has run into problems in the wake of the financial crisis, as many of the early participants have had their mortgage applications rejected by the banks.
Four bidders for the new Aqaba port project have been short-listed. Meanwhile, the Al Maabar consortium has announced that it is planning to invest US$10bn in redeveloping the present Aqaba site.

Source: Country Report

This report covers the following industry codes:
SIC Code: 48;10;60;49;80;53;65;47
NAICS Code: 517;212;11;52;22;62;44;53;48