Country Report Jordan November 2009

Outlook for 2010-11

• Power in Jordan will remain 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 cabinet will prioritise economic reform and stability over political liberalisation. An election is scheduled for late 2011, but parliament should remain conservative and tribally dominated, and thus generally pliant.
• The government is set to keep a tight rein on spending in 2010-11, in an effort to bring the fiscal deficit down to a more manageable level. However, with revenue growth sluggish, the deficit will remain large.
• Although it will recover over the forecast period, real GDP growth is likely to remain below the highs of 2004-08, as the economy struggles because of weak public spending growth and the end of the construction boom.
• Headline average inflation will rise sharply in 2010, but, once the declines in commodity prices of early 2009 fall out of the year-on-year comparison, we expect price growth to fall, to an average of 2.5% in 2011.
• We expect Jordan's current-account deficit to narrow steadily over the forecast period, as a widening of the non-merchandise surplus offsets an increase in the trade deficit.

Monthly review

• The 15th anniversary of Jordan's peace treaty with Israel has passed. The milestone was not celebrated in the kingdom, and coincided with calls by Jordan for the UN to debate the Goldstone report on Israel's attack on the Gaza Strip.
• Jordan's position has improved in Reporters Without Borders' Press Freedom Index. However, it still remains close to the bottom third of the rankings.
• The government has extended its guarantee on bank deposits until end-2010, amid signs that interbank rates have eased to pre-crisis levels, but that lending to corporate and private borrowers remains weak.
• The government has pushed through a number of temporary revisions to the social security system, designed to contain costs.
• The IMF and the Central Bank have painted a relatively optimistic outlook for the economy in 2010. However, alarmed by recent negative indicators, the prime minister has called on the cabinet to act.
• The king has proposed the setting up of a new fund to support start-ups in the technology sector.
• The country's first independent power plant has come on stream, but plans to build Jordan's first major wind farm have run into trouble.

Source: Country Report

This report covers the following industry codes:
SIC Code: 53;59;49
NAICS Code: 44;22