Jordan: A Growing and Robust Economy
The Jordanian economy grew at a rate of 3% in 2012, a number that is estimated to increase to 3.5% before the end of 2013. Jordan has demonstrated an innovation-driven problem solving approach, despite regional turmoil, providing reassurance that the country is open for business and serious about economic reforms. As a result, in 2012 Jordan showed a 7 point improvement in the World Economic Forum’s ‘Global Competitiveness Report,’, scoring 64th out of the 144 countries measured. Out of the 185 countries measured for ease of doing business in the World Bank’s ‘Doing Business’ report, Jordan stands at 106th. Jordan is also 32nd out of 179 countries listed on the Index of Economic Freedom, a publication seeking to promote economic opportunity and prosperity.
Jordan has a free market-driven economy, with outward-oriented economic policies and an approach led by the private sector. It is a service-oriented economy, where the services sector constitutes 67.6% of the total GDP. Manufacturing constitutes 19.2% of the GDP. Jordan’s main manufacturing exports include garments and textiles, pharmaceutical products, jewelry, electrical appliances, machinery and equipment, furniture, chemicals, minerals and plastic products. Main export markets for Jordan include: Arab countries (44%), North America (28%), Asia (21%), EU (3%) and other (3%). Because of the numerous bilateral and multilateral free trade agreements, the demand for Jordanian manufactured goods has increased considerably.
Beyond the Kingdom’s expanding production capabilities, Jordan has experienced the ongoing privatization of major state-owned enterprises. Jordan’s privatization program is considered the most successful in the Middle East. To date, it has involved the privatization of 33% of The Jordan Cement Factories, a grant of four bus concessions by the Public Transportation Corporation, the sale of 49% of the Jordan Telecommunications Corporation, project contracts for the Water Authority of Jordan, concessions for the Aqaba railway, and the divestiture of government shares at approximately $900 million.
Jordan has also implemented significant advances in structural and legal reform, successfully introducing a new Tax Law, Labor Law, Alternative Energy Law, and Investment Promotion Law. These laws have been a contributing force behind the increased investments, both national and foreign, focused on alternative energy and entrepreneurship. In September 2012, prompted by the legislative developments, a $2 million provision of capital was allocated to qualified microfinance institutions to provide micro loans to low-income borrowers with the aim of encouraging private sector development, prompting downstream benefits for consumers and suppliers by targeting micro-entrepreneurs.
Jordan leads the region in investments in education, dedicating many resources to training a highly qualified workforce. More than 20.4% of Jordan’s GDP goes to educating a labor force to meet the demands of the modern market. Starting at a very young age, Jordanian children are taught English and computer/IT skills. The Kingdom’s literacy rate, at 91%, is among the highest in the Middle East. This exposure to education has enabled Jordanians to surpass peers when it comes to producing web content. As a result, Jordan is responsible for the largest amount of Arabic content available on the web. Clearly, this makes the country a lead destination for international companies seeking to outsource product development, localization and arabization of worldwide content, business process outsourcing and back office operations and R&D. The result of providing this innately creative and well-educated work force with world class incubation and funding facilities has allowed Jordanians to start their own small businesses, some of which have gone on to be acquired by international companies, including Yahoo.com.
Jordan’s sound leadership, solid infrastructure and qualified workforce, merged with its fixed exchange rate and strong monetary policy will continue to assure investors that Jordan will remain a competitive investment destination, where the economy thrives and reacts positively, with agility, to external factors.
Economic Reform and Development
- According toa report from telecommunications company Ericsson, Amman has the highest level of ICT services in the region,representing 4.6% of the country’s GDP against a regional average of 3.5%.
- The Central Bank of Jordan, in collaboration with the Ministry of Planning and International Cooperation,has signed an agreement with the International Bank for Reconstruction and Development to provide funding for micro, small and medium enterprises at competitive interest rates and through local banks.
- The U.S. Government decided to increase its economic assistance to Jordanby USD 340 million inadditional annual economic aid beginning in 2014.This will bring the total of American financial and economic aid to the Kingdom up to $1 billionannually.
- Jordan entered into a three year Stand-By Arrangement with the IMF in 2013, structured through a National Economic and Fiscal Reform Plan designed to reduce deficit and debt, restructure subsidy systems and move Jordan towards a healthier economy.
- With a highly qualified, young and competitive workforce, supported by world class infrastructure, located at the heart of the MENA region, and with strong trade relationships, Jordan serves as a gateway to 350 million consumers in the region and one billion consumers worldwide.