Country Forecast Jordan October 2017 Updater

Country Forecast Jordan October 2017 Updater

  • October 2017 •
  • Report ID: 325691

  • The Economist Intelligence Unit expects King Abdullah II to remain in power and to continue to determine the overall pace and extent of political reform, as well as make key appointments. He will allow some moderate dissent within the political system and media, but this will not fully satisfy the demands of his opponents. The king is likely to encourage small, incremental changes-including greater parliamentary powers and some further adjustments to the voting system in subsequent elections-to give the impression of reform.
  • The Islamic Action Front (the political arm of the old Muslim Brotherhood) will use its return to parliament to criticise government policies and the king's modernisation efforts, but will also show greater willingness to be co-opted into the political process and will stand in the next election.
  • The king will maintain a pro-Western foreign policy and strong ties with the US. Regional instability and the influx of refugees from Syria pose major security challenges to Jordan, but its security forces should-despite some successful jihadi attacks-be able to withstand the challenge, with external support. Jordan will continue to conduct air strikes against jihadi groups in Syria.
  • The government will continue to try to rein in the large fiscal deficit, with the support of the IMF. However, austerity will be tempered by political concerns and weak growth, which will limit revenue expansion, ensuring only slow progress in deficit reduction. The IMF will also support measures to improve the business and investment environment.
  • Despite regional unrest, Jordan will benefit from its relative stability and continue to attract modest investment. Several large construction projects are under way, which should help to support the economy, as should plans to step up the exploitation of Jordan's mineral resources and development of renewables. We forecast that growth will pick up slowly as regional demand improves but be hindered by volatile global demand, averaging 3% in 2018-22.
  • Inflation will moderate slightly in 2018-20 but will eventually be driven higher by rising global energy and food prices in the early part of the forecast period and a modest strengthening in domestic demand.
  • The public-sector debt burden will remain heavy because of continued large fiscal deficits and persistent losses at the national electricity company, but it will fall as a proportion of GDP. In addition, the budgetary shortfalls will mean that the government is unable to end its reliance on foreign aid.
  • The current-account deficit will remain large, averaging 5.9% of GDP a year in 2018-22, as export performance remains weak early in the forecast period.


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Country=Jordan Date=201710 Topic=Demand Publisher=TheEconomistIntelligenceUnit Price=1000