Challenges of the Past Two Years
The Arab Spring dealt serious blows to an economy already tried by the global crisis and inherent constraints, including lack of natural resources. Tourism and investments slowed, the supply of Egyptian gas, accounting for almost 80% of the energy generation needs, was severely disrupted, causing an extra US$4b burden on the budget, trade through the strategic Syria routes all but halted, and a huge influx of Syrian refuges- 430,000 by early March 2013- has been further straining already limited resources. Such severe external pressures on Jordan’s economy created by early 2012 a fiscal crisis and quick slowdown in growth (a 3% in nominal terms for 2012 and gas alone cost the government more than US$2b annually, and the unprecedentedly high energy import bill in turn put significant pressures on the Central Bank of Jordan’s reserves, pushing up public debt and widening the current account deficit.
The Challenge of Employment
Jordan struggles with high unemployment rates, particularly among university graduates, and with the continuous pressure of meeting expectations for increased incomes and countering globally rising inflation. Jordan registered a high unemployment rate of 12.2% in 2012. Jordan’s economy has been struggling with an average unemployment rate of 13.5% between 2000-2012. Poverty level has been increasing over past years, with 14.4% of the population living on less than $3 a day, and highly concentrated in the regions outside the capital of Amman. More than 51% of Jordan’s population is within the lower-income category and 40% in the middle-income category.
Courage to Overcome the Crisis: Towards a Healthier Economy
These critical conditions pushed Jordan this year into an IMF Program through a three-year Stand-by Arrangement, structured within a National Economic and Fiscal Reform Plan that aims to provide an exit strategy from the current crisis through fiscal and economic measures to reduce deficit and debt, including removing subsidies on fuel derivatives, restructuring a subsidy system targeting lower-income families, gradually increasing electricity tariffs, and structural adjustments. Jordan remains committed to undertake these painful but necessary measures to achieve a healthier economy.
An Open Economy, Open for Business
An open economy with extensive trade and financial linkages globally, Jordan has remained an oasis of stability. If its economy is showing resilience and signs of improvement in the face of the serious challenges of the past two years, it is also thanks to the sound macroeconomic management and sustained structural reform of the past decade. These have positioned Jordan as an attractive destination for investments and businesses. With a young, highly qualified and competitive workforce, supported by world class infrastructure, and strategically located at the heart of the MENA region, Jordan is one of only four countries with a Free Trade Agreement with the US, and it serves as a gateway to not only 350 million consumers in the region, particularly in the Iraqi and Gulf markets, but also one billion consumers worldwide.
Silicon Valley of the Arab World
Jordan ICT sector grew over little more than a decade into the third largest contributor to the GDP (14.6% of the total), accounting for 10% to the national economic output.
Today, Jordan creates and manages 75% of all Arabic-language internet content from the region, despite accounting for only two per cent of the region’s population.
Described by the global media and ICT giants as the Arab Silicon Valley, Jordan was ranked in 2012 amongst the world’s best 10 places to launch a tech start-up.
ICT success capitalized on Jordan’s young, tech-savvy population, liberal and progressive social and political environment, and bold education reform, all providing fertile ground for creativity, innovation, and entrepreneurship The number one education system in the region, Jordan has the highest ratio of bilingual (Arabic-English) workforce in the world, graduates the highest percentage of engineers in the MENA and has successfully connected to the internet 86% of all of its schools. This was coupled with a progressively regulatory environment, strong IP protections, and aggressive infrastructure investments.