Economy of Jordan
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Jordan is a small country with limited natural resources, but has improved much since its inception as a country. Its current GDP per capita soared by 351% in the Seventies. But this growth proved unsustainable and consequently shrank by 30% in the Eighties. But it rebounded with growth of 36% in the Nineties. Just over 10% of its land is arable, and even that is subject to the vagaries of a limited water supply. Rainfall is low and highly variable, and much of Jordan's available ground water is not renewable. Jordan's economic resource base centers on phosphates, potash, and their fertilizer derivatives; tourism; overseas remittances; and foreign aid. These are its principal sources of hard currency earnings. Lacking forests, coal reserves, hydroelectric power, or commercially viable oil deposits, Jordan relies on natural gas for 10% of its domestic energy needs. Jordan used to depend on Iraq for oil until the Iraq invasion in 2003 by the United States. Jordan is also classified as an emerging market.
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[edit] Exchange Rates
This is a chart of trend of gross domestic product of Jordan at market prices estimated by the International Monetary Fund with figures in millions of Jordanian Dinars.
| Year | Gross Domestic Product | US Dollar Exchange | Inflation Index (2000=100) |
|---|---|---|---|
| 1980 | 1,165 | 0.29 Jordanian Dinars | 35 |
| 1985 | 1,971 | 0.39 Jordanian Dinars | 45 |
| 1990 | 2,761 | 0.66 Jordanian Dinars | 70 |
| 1995 | 4,715 | 0.70 Jordanian Dinars | 87 |
| 2000 | 5,999 | 0.70 Jordanian Dinars | 100 |
| 2005 | 9,118 | 0.70 Jordanian Dinars | 112 |
For purchasing power parity comparisons, the US Dollar is only exchanged at 0.34 Jordanian Dinars.
[edit] Economic History
Since 1987, Jordan has struggled with a substantial debt burden and rising unemployment. In 1989, efforts to increase revenues by raising prices of certain commodities and utilities triggered riots in the south. The mood of political discontent that swept the country in the wake of the riots helped set the stage for Jordan's moves toward democratization.
Jordan also suffered adverse economic consequences from the 1990-91 Gulf War. While tourist trade plummeted, the Gulf states' decision to limit economic ties with Jordan deprived it of worker remittances, traditional export markets, a secure supply of oil, and substantial foreign aid revenues. UN sanctions against Iraq—Jordan's largest pre-war trading partner—caused further hardships, including higher shipping costs due to inspections of cargo shipments entering the Gulf of Aqaba. Finally, absorbing up to 300,000 returnees from the Gulf countries exacerbated unemployment and strained the government's ability to provide essential services.
[edit] Macro-economic trend
Although the population is highly educated, its high growth rate (3.4% in the late 1990s, but 2.8% since 2003 and declining) and relative youth (more than 50% of Jordanians are under 16) make it difficult for the economy to generate jobs and sustain living standards. However, campaigns to boost female education and awareness about contraceptives have since gradually if somewhat belatedly reduced population growth. It is expect to remain over 2.5% till the end of the decade.
Jordan's geographic disposition and sole port of Aqaba puts it far from other markets makes its exports expensive to deliver. The problem is further compounded by complicated government procedures and bureaucratic culture. A further problem remains emphasis on large scale foreign investment and limited programmes to enhance local enterprise and productivity. This in turn means that several industries in Jordan are protected by the government and run near local monopolies (these include the Jordan Refinery Company among others, where steel and cement imports are limited) and government levies on raw materials generally translate to higher costs of production. A further problem can be found in local small and medium sized enterprises local and regional outlook rather than an orientation towards broader export markets.
Political disputes among its traditional trading partners—Iraq, Saudi Arabia, and the Gulf states—frequently restrict regional trade and development. King Abdullah II has encouraged his government to liberalise the economy, improve economic ties in the region, and seek opportunities in the global information economy.
[edit] External trade
Since 1995, economic growth has been low. Real GDP has grown at only about 1.5% annually, while the official unemployment has hovered at 14% (unofficial estimates are double this number). The budget deficit and public debt have remained high and continue to widen, yet during this period inflation has remained low due mainly to stable monetary policy and the continued peg to the United States Dollar. Exports of manufactured goods have risen at an annual rate of 9%. Monetary stability has been reinforced, even when tensions were renewed in the region during 1998, and during the illness and ultimate death of King Hussein in 1999.
Expectations of increased trade and tourism as a consequence of Jordan's peace treaty with Israel have been disappointing though not unexpected. Security-related restrictions to trade with the West Bank and the Gaza Strip have led to a substantial decline in Jordan's exports there. Following his ascension, King Abdullah improved relations with Arabic states of the Persian Gulf and Syria, but this brought few real economic benefits. Most recently the Jordanians have focused on WTO membership and a Free Trade Agreement with the U.S. as means to encourage export-led growth.
[edit] Investment
The stock market capitalisation of listed companies in Jordan was valued at $37,639 million in 2005 by the World Bank.[1]
GDP: purchasing power parity - $26.8 billion (2005 est.)
GDP - real growth rate: 6.1% (2005 est.)
GDP - per capita: purchasing power parity - $4,700 (2003 est.)
GDP - composition by sector:
agriculture: 3.5%
industry: 29.9%
services: 66% (2005 est.)
Population below poverty line: 12.5% official rate, but estemated to be close to 30% (2001 est.)
Household income or consumption by percentage share:
lowest 10%: 3.3%
highest 10%: 29.8% (1997)
Inflation rate (consumer prices): 5% (2005 est.)
Labor force: 1.46 million (2003)
Labor force - by occupation: agriculture 5%, industry 12.5%, services 82.5% (2001 est.)
Unemployment rate: 16% official rate; actual rate is 25%-30% (2001 est.)
Budget:
revenues: $2.397 billion
expenditures: $3.587 billion, including capital expenditures of $582 million (2003 est.)
Industries: phosphate mining, petroleum refining, cement, potash, light manufacturing, tourism
Industrial production growth rate: 3.5% (2003 est.)
Electricity - production: 6,080 GWh (1998)
Electricity - production by source:
fossil fuel: 99.51%
hydro: 0.49%
nuclear: 0%
other: 0% (1998)
Electricity - consumption: 6,102 GWh (1998)
Electricity - exports: 2 GWh (1998)
Electricity - imports: 450 GWh (1998)
Agriculture - products: wheat, barley, citrus, tomatoes, melons, olives; sheep, goats, poultry
Exports: $2.908 billion (f.o.b., 2003 est.)
Exports - commodities: phosphates, fertilizers, potash, agricultural products, manufactures
Exports - partners: US 19%, Iraq 18.6%, India 8.6%, Saudi Arabia 5% (2003 est.)
Imports: $4.946 billion (f.o.b., 2003 est.)
Imports - commodities: crude oil, machinery, transport equipment, food, live animals, manufactured goods
Imports - partners: Iraq 12.5%, Germany 7.8%, US 7.7%, China 7.2%, Italy 5.2%, France 4.7%, UK 4.5% (2003 est.)
Debt - external: $7.683 billion (2003 est.)
Economic aid - recipient: ODA, $553 million (2000 est.)
Currency: 1 Jordanian dinar (JD) = 1,000 fils
Exchange rates: Jordanian dinars per US dollar - 0.709 (2003), 0.709 (2002), 0.709 (2001), 0.709 (2000), 0.709 (1999)
note: since May 1989, the dinar has been pegged to a group of currencies
Fiscal year: calendar year
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