Latest news with #RaadMahmoudAl-Tal
Ammon
10-07-2025
- Business
- Ammon
An economy that consumes more than it produces
Raad Mahmoud Al-Tal The Central Bank of Jordan publishes regular studies through its Applied Economic Studies Journal, aiming to improve understanding of the country's economic performance and support better policymaking. One notable study, titled "Estimating Aggregate Demand in the Jordanian Economy," examines the structure of GDP and how different components of demand—like household consumption, investment, and government spending—shape the economy. The study shows that private consumption, or the money households spend, dominates the Jordanian economy. In previous years, it made up 83 per cent of GDP. Although this figure dropped to 73.6 per cent in 2023, it is still quite high. This means the economy depends mostly on domestic spending, rather than on exports or productive investments. Such a consumption-driven model is fragile because it can quickly weaken if households reduce spending due to inflation, rising costs, or economic uncertainty. Investment spending, which includes both public and private investments, contributes around 23 per cent of GDP. While this level is not extremely low, it falls short of what Jordan needs to grow its production base, generate more jobs, and lower its unemployment rate. The study highlights that private investment, in particular, remains weak. This reflects structural issues such as a challenging business environment and hesitancy to invest in long-term projects due to uncertainty or risk. Government consumption, mainly spending on salaries, subsidies, and operational expenses, makes up about 17 per cent of GDP. These expenditures usually don't generate long-term economic value. Instead, they place pressure on the public budget and reduce the government's ability to spend on capital or development projects that could stimulate growth and support productive sectors. One of the most concerning findings is related to net exports, which represent the difference between exports and imports. The study shows that net exports made a negative contribution to GDP of -25.1 per cent. This figure improved in 2023 to -12.1 per cent, but the fact remains that Jordan imports significantly more than it exports. This suggests that local production is not strong enough to meet domestic demand or compete globally, leaving the economy vulnerable to shifts in trade conditions and exchange rates. Given this situation, it is essential for the government's economic team to understand the structure and drivers of aggregate demand in Jordan. Such insight is critical for making sound policy choices. They also need to acknowledge that economic growth remains fragile and sensitive to external shocks like imported inflation and disruptions in global supply chains. More fundamentally, the economy struggles with limited foreign income and a shrinking productive base, which reduces its capacity to create jobs and maintain steady growth. In summary, Jordan's economy relies heavily on consumption. It grows when people spend more, but investment and exports remain relatively weak. This imbalance limits long-term growth, increases exposure to economic shocks, and contributes to ongoing challenges like unemployment, trade deficits, and fiscal stress. To address these issues, Jordan needs to take several important steps. First, the government should redirect spending toward capital projects that support high-impact productive sectors. Second, education and vocational training programs should be better aligned with the needs of these sectors. Third, investment incentives must encourage local content and export capacity. Lastly, the country should adopt a flexible industrial policy that connects manufacturing with sectors like agriculture, mining, and actions can help create a more balanced and resilient economy—one that produces more, exports more, and provides better opportunities for employment and growth. -
Ammon
29-06-2025
- Business
- Ammon
Jordan's Economic Resilience Strengthened by IMF Support
Raad Mahmoud Al-Tal Jordan continues to demonstrate strong economic resilience despite facing persistent regional conflicts and global uncertainty. The recent completion of the third review under the Extended Fund Facility (EFF) by the International Monetary Fund (IMF) confirms that Jordan's economic reform program remains firmly on track. With this review, Jordan gained immediate access to SDR 97.784 million (about US$134 million), bringing total payments under the EFF to nearly US$595 million. The IMF also approved a new 30-month Resilience and Sustainability Facility (RSF) worth SDR 514.65 million (about US$700 million), aimed at supporting long-term reforms in the water and energy sectors and improving preparedness for future public health emergencies. Economic performance in 2024 exceeded expectations, with real GDP growth reaching 2.5%, reflecting the economy's ability to withstand external shocks. Inflation remained low at 1.9%, supported by the Central Bank of Jordan's commitment to monetary and financial stability and the peg to the U.S. dollar. International reserves rose to over US$20 billion by the end of 2024, surpassing the IMF's adequacy threshold. These indicators confirm that Jordan has maintained macroeconomic stability, which is crucial for investor confidence and long-term growth. Despite regional spillovers, including increased fiscal pressures, the Jordanian government has made progress in gradually reducing its fiscal deficit. The overall central government deficit stood at 6.4% of GDP in 2024, slightly higher than the previous year but expected to improve to 4.5% by 2026. Importantly, the government has continued to prioritize public investment and social spending while improving the efficiency of tax collection and expenditure. The structural fiscal balance is also expected to strengthen as reforms in revenue administration and expenditure controls take effect. The newly approved RSF provides critical financing to address structural weaknesses in two of Jordan's most strained sectors: electricity and water. These sectors have long contributed to fiscal pressures due to inefficiencies and accumulated debt. The RSF will help improve financial sustainability and service delivery, especially through reforms targeting energy efficiency and water resource management. In parallel, the program includes provisions for enhancing Jordan's capacity to manage health risks, including future pandemics, through stronger institutional and financial preparedness. However, challenges remain. Unemployment remains high at 21.4% in 2024, with youth and women disproportionately affected. While foreign direct investment (FDI) is stable at around 3% of GDP, it needs to increase to support job-rich, private-sector-led growth. The government's reform agenda under the Economic Modernization Vision is focused on improving the business environment, enhancing labor market policies, and encouraging competition and innovation. These measures are essential to attract investment, diversify the economy, and increase productivity. Jordan has shown notable resilience under difficult circumstances, supported by sound policies and close cooperation with the IMF. Continued progress depends on steadfast implementation of fiscal and structural reforms, improved governance in public utilities, and greater inclusion of youth and women in the labor force. With strong donor backing and internal policy discipline, Jordan is well-positioned to sustain growth, reduce vulnerabilities, and build a more inclusive and sustainable economy.
Ammon
10-06-2025
- Business
- Ammon
Unemployment in Jordan – First quarter of 2025
Raad Mahmoud Al-Tal The Labor Force Survey, done every three months by Jordan's Department of Statistics, gives useful data about unemployment. The survey includes 16,560 households across all parts of the country. People are asked if they looked for a job in the past four weeks, following international methods. In the first quarter of 2025, the unemployment rate in Jordan was 21.3 per cent, slightly lower than the same period in 2024 (by 0.1 per cent). This small drop could show that the labor market is improving slowly, possibly because of better economic growth early this year. Over the last three years, unemployment went down by 1.5 percentage points, which is a good sign for job creation. However, there is a clear difference between men and women. Unemployment for men rose to 18.6 per cent, while for women it dropped to 31.2 per cent. This may be because some sectors that hire more women have improved recently. Also, 40 per cent of unemployed people have less than a high school education, while 60 per cent finished high school or more. This shows that many job seekers may not have the right skills for the job market. It also shows the need for better education and job training. Among those who have jobs, 46.4 per cent did not finish high school, 10.3 per cent have a high school diploma, and 43 per cent have more than a high school education. This means many jobs still go to workers with fewer qualifications, while university graduates may struggle to find jobs that fit their degrees. The low percentage of high school graduates in the labor force shows that this level of education may not be enough to get a good job. Jordan needs stronger vocational and technical education to help more people get useful skills. Even though unemployment for women has gone down, women's participation in the economy is still very low. Only 14.5 per cent of women were part of the workforce in early 2025, compared to 51.2 per cent of men. This big gap shows that women still face many challenges, like fewer job options, family responsibilities, and work conditions that don't support them. To improve this, the country needs to create more flexible jobs and support women's economic role. Foreign workers made up 44 per cent of all workers in Q1 2025, down from 44.7 per cent in 2022. This small drop may be the result of new labor policies or better job chances for Jordanians. This is a good sign for reducing local unemployment. In short, Jordan still faces high unemployment. The main problems include high joblessness among men, low involvement of women in the workforce, and a mismatch between what people study and what jobs are available. Jordan must improve vocational training, support the private sector, attract more investment, and create jobs. It should also help women and people with lower education levels join the labor market more easily.
Ammon
29-05-2025
- Business
- Ammon
Exports now cover 49 per cent of imports – A step forward, but not enough
Raad Mahmoud Al-Tal The Department of Statistics has released the foreign trade data for the first quarter of 2025, showing a modest improvement in export performance. However, the trade balance remains significantly negative. Total exports rose by 11.6 per cent, reaching JD2.31 billion, while imports increased by 6.6 per cent to JD4.68 billion. As a result, the trade deficit widened by 2.2 per cent to JD2.37 billion compared to the same period in 2024. One of the most important indicators in external trade analysis is the export-to-import coverage ratio, which measures how much of a country's imports are financed by its exports. A ratio of over 100 per cent indicates a surplus, while a lower ratio reflects a trade deficit that must be financed externally. For Jordan, this ratio improved slightly from 47 per cent in Q1 2024 to 49 per cent in Q1 2025. In practical terms, this means exports now cover nearly half of imports. While still far from a balanced trade position, this marks a small but encouraging shift toward greater economic self-reliance. In March alone, the coverage ratio reached 53 per cent, compared to 48 per cent in March 2024. This reflects renewed momentum in key export sectors. National exports grew by 11.7 per cent, rising from JD1.87 billion to JD2.09 billion. While exports of raw phosphate and pharmaceuticals declined, these losses were offset by gains in chemical fertilizers, jewelry, and other products. Additionally, re-exports increased by 10.4 per cent, signalling more activity in trade and logistics. On the import side, the 6.6 per cent rise can be attributed to stronger domestic demand and possibly higher international prices. Notable increases were recorded in industrial machinery (29 per cent), electrical machinery (45.8 per cent), and cereals (34.1 per cent)—indicating continued investment and economic activity. On the other hand, imports of crude oil and its derivatives fell by 6.1 per cent, and vehicle imports dropped by 24.4 per cent, which helped ease the overall import bill. Export composition reflects some level of diversification, with strong performance in garments, fertilisers, potash and jewelry. These sectors are benefiting from stable international demand. However, the decline in phosphate and pharmaceutical exports suggests market or production challenges. Import patterns show a high reliance on capital goods, which could indicate productive investments, but also highlight the economy's continued dependence on external supply chains, a structural vulnerability. Despite better export performance, the overall trade deficit remains large at JD2.37 billion. This highlights Jordan's continued reliance on imports to meet domestic needs. Narrowing this gap will require deeper structural reforms, especially boosting productive sectors and expanding access to international markets. On a positive note, exports increased to several important regions, including Arab countries, North America, India and parts of Europe such as the Netherlands. This reflects some success in market diversification. However, the fact that imports from many of these same regions also grew means that trade with them still tends to be unbalanced. More targeted trade policies are needed to promote local exports and reduce non-essential imports. Improving the export-to-import ratio requires more than just short-term gains. It demands long-term reforms focused on strengthening export-oriented sectors, encouraging domestic investment, and upgrading trade infrastructure. A more competitive business environment, better logistics, and support for high-value-added industries are all essential to boosting Jordan's export capacity. While the current coverage ratio of 49 per cent marks an improvement, it remains insufficient. The medium-term goal should be to lift this ratio above 60 per cent. This is achievable if local production is supported more effectively, the export base is diversified, and dependence on imports is reduced. A more balanced trade account is not only desirable, it is necessary for sustainable economic growth and resilience.
Ammon
26-05-2025
- Business
- Ammon
Economic modernization priorities in the industrial sector
Raad Mahmoud Al-Tal The recent Royal visit to three factories in Al-Muwaqqar Industrial City underscored the growing importance Jordan places on the industrial sector as a key engine of economic growth. This focus aligns with the objectives of the Economic Modernization Vision, which serves as a national roadmap for sustainable development and job creation. The visit sent a clear economic message: it represents direct support for existing investments—both local and foreign—and reflects core priorities of the vision. These include stimulating investment, boosting exports, empowering the Jordanian workforce, and increasing value-added production within supply chains. The diversity of the factories visited—ranging from food production to packaging and garment manufacturing—demonstrates the vision's goal to diversify the production base and reduce reliance on traditional sectors. Supporting such manufacturing activities contributes to higher growth rates and the expansion of export markets. Equally important is the sector's capacity to employ Jordanians. These factories currently employ over a thousand Jordanians, with high representation in both administrative and technical roles. This highlights the commitment to human capital development and increasing private-sector employment, especially outside the capital, which helps address imbalances in the labor market. A notable feature of these factories is their strong export orientation. They rely heavily on access to regional and global markets, reinforcing the vision's strategic objective of doubling industrial exports and enhancing the competitiveness of Jordanian products. This export-driven approach is essential for increasing foreign currency earnings, reducing the trade deficit, and supporting broader macroeconomic stability. The visit also reflects a clear policy direction toward promoting industrial decentralization. By encouraging investment in industrial cities beyond Amman—such as Al-Muwaqqar, which benefits from modern infrastructure and attractive incentives—the vision seeks to distribute economic activity more equitably across the country and foster more inclusive growth. Particular attention is being paid to industries that generate high value, whether through food processing, specialized packaging, or manufacturing sports apparel for export. These sectors support the development of industrial value chains, promote integration between small and large enterprises, and encourage innovation and the use of modern technologies—critical components of the vision's competitiveness pillar. The royal visit delivered a strong message of national support for the industrial sector as a key driver of economic transformation. It emphasized the need to continue improving the business environment, streamlining procedures, and expanding investment incentives. It also highlighted the importance of collaboration between the public and private sectors in implementing development projects that generate employment and contribute to social and economic stability. More than a ceremonial tour, the visit was a strategic signal that industry will remain central to Jordan's national policies. Supporting productive enterprises is essential to driving growth and achieving the broader goals of economic transformation.
