Country Report Jordan October 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

• Jordan has found itself caught in the middle of a diplomatic row between Syria and Iraq, after it appeared that the prime minister, Nader al-Dahabi, had taken Iraq's side.
• Clashes between Palestinian protesters and Israeli security forces at the Al Aqsa mosque in Jerusalem have led to strong condemnation of Israel's actions by the Ministry of Foreign Affairs and, subsequently, by the king.
• Faced with a sharp widening of the fiscal deficit in the first eight months of 2009, the Ministry of Finance has indicated that it is contemplating a smaller budget in 2010, with reductions in both current and capital spending.
• The government has announced that it will establish a state-owned company, the National Company for Food Security and Supply, which will import basic foodstuffs that will be sold to the public at "affordable" prices.
• The Ministry of Labour has established a Megaprojects Unit, which will seek to assign Jordanian labour to large-scale government-backed projects.
• Jordan and Syria have agreed to a series of economic co-operation measures, as part of a drive to boost trade between the two countries.
• The king has laid the foundation stone for a phosphoric acid plant, which, when it comes on stream in 2012, could boost exports by US$300m a year.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60;49;10
NAICS Code: 52;22;212