Country Report Jordan September 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 cabinet will prioritise economic reform and stability over political liberalisation. However, in the near term the government will focus its efforts on supporting demand in the face of a rapidly weakening economy.
• Jordan's fiscal outlook has deteriorated, with new official data revealing a decline in revenue in the first seven months of 2009. As a result, we now expect the fiscal deficit to average 12.5% of GDP in 2009-10.
• We expect average inflation to decline steeply in 2009, to just 1.7%, on the back of lower imported commodity prices, before rising to 5.8% in 2010, as the sharp price rises of 2008 fall out of the year-on-year comparison.
• We expect real GDP growth to decline to 3% in 2009-10, as the slowdown in the financial sector spreads to the rest of the economy, and foreign direct investment inflows are depressed amid the global economic recession.
• Jordan's current-account deficit will narrow sharply, in line with lower global commodity prices (although oil prices have crept higher recently), from an estimated US$2.4bn (11.9% of GDP) in 2008 to around US$1.4bn in 2009-10.

Monthly review

• The interior minister, Nayef Qadi, has attacked the press for "inaccurate reporting", and accused some of accepting funds from "suspicious foreign parties".
• The Muslim Brotherhood has moved closer to a formal split between moderates and hardliners, after four leading moderates in the group's executive bureau resigned.
• The budget deficit has continued to widen sharply, reflecting both a fall in overall revenue in the first seven months of the year and a sharp rise in capital expenditure.
• The tax law has been criticised in parliament, with MPs especially opposed to the introduction of corporate tax on agricultural incomes.
• The government has been forced to announce that it will finance the planned Amman-Zarqa Light Railway, after two earlier attempts to launch it as a public-private partnership were abandoned.
• Jordan Phosphates Mining Company has reported a fall in profits, but the company has pledged to continue with plans to increase production.
• The Amman Stock Exchange has been lifted by news that three major traders have had a temporary ban on their trading in banks lifted.

This report covers the following industry codes:
SIC Code: 47;48;60
NAICS Code: 48;517;52