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Jordan - Overview

Contents extracted from the comprehensive atlas of international trade by Export Entreprises

Introduction

Capital:: Amman
Area:: 89 km2
Total Population:: 6.318
Annual growth rate:: 2.00%
Density:: 71.00/km2
Urban population:: 83%
Population of Amman (2.524), Zarqa (792), Irbid (928), Al Rusayfah (200), Al Quwaysimah (130)
Official language: Arabic.
Other languages spoken: The Adhyge language, the Domari language, Armenian.
Business language: English
Ethnic Origins:: 98% Arabs (half of them Palestinians), 1% Circassians, 1% Armenians.
Beliefs: Muslims 90%, Christians 6%.
Telephone codes:
To make a call from: 0
To make a call to: +962
Internet suffix:: .jo
Type of State::
Hashemite Kingdom. Constitutional monarchy where the King has absolute powers.
Type of economy::
Lower-middle-income economy, Emerging Financial Market
An economy dependent on petroleum exports and international aid.

Economic overview

Jordan is a small emerging economy with a GDP of less than EUR 24 billion, driven by the financial services sector -the first Arab bank is a Jordanian bank- but also by tourism, trade and real estate. The manufacturing sector represented less than 30% of GDP in 2013. The Jordanian economy has been largely liberalized and privatized in the 2000s, a period of strong growth.

With few natural resources (lack of oil, water scarcity), among the countries of this region Jordan is one of the most committed to reforms (privatization, tax reforms, opening the banking sector ...). The three main natural resources of the country are phosphates, potash and lime. Recent economic reforms aimed at liberalizing trade and attracting investments allowed Jordan to show good performance. In 2013, the growth rate reached 3.3% (after 2.8% in 2012). Poverty, unemployment (more than 14% in 2013), a large foreign debt and a large public debt (79% of GDP in 2012 then 84% in 2013) are the main problems of the country. Jordan's economy remains vulnerable to external shocks and regional unrest. It is also very dependent on foreign aid (IMF loan of USD 2 billion over 3 years in 2012).

The country has a relatively large budget deficit (9.1% of the GDP in 2013) due especially to the increase in subsidies for food and energy products, associated with the drop in international aid.

Jordan was very little affected by the financial crisis and the country has experienced a moderate economic slowdown in the last two years, mostly due to the decrease in money transfers from the immigrant workforce in the countries of the Gulf, which represent on average 3 billion USD annually (more than 15% of the GDP). Its economic outlook is rather worrying, notably due to the short-term impact of the "Arab spring", which reduced the number of tourists visiting the country (an important economic factor) but more importantly due to the consequences of the Syrian crisis which strongly disturbed the border economy in the north of the country: the country's structural economic crisis is worsened by a humanitarian and financial crisis of unprecedented scale.

In 2014, however, Jordan's development receives the attention -especially financial- of both large Western countries and monarchies of the Gulf, since the country was able to become a central element of stability in the Near and Middle East, ensuring peace on the borders it shares namely with Saudi Arabia, Iraq and Israel.

Main industries

Agriculture represents 3.2% of the GDP and employs less than 1.3% of the workforce. The lack of water creates an obstacle to agricultural development. The principal crops are wheat, barley, lentils, tomatoes, eggplants, citrus fruits, olives and grapes. Phosphates and potassium are the only natural resources of the country.

Industry (mostly pharmaceutical) and mining together contribute to 29.9% to GDP and concentrate 17.9% of the workforce. The manufacturing sector is rather limited and dominated by textiles, a sector presently in a state of crisis due to international competition. The country is also rich in uranium deposits, still unexploited, which represent 3% of world's reserves.

The services sector, which employs more than 80.7% of the workforce, has contributed 67% of the GDP in 2013. Jordan is particularly active in the fields of communication technologies and financial services. The sectors of distribution and tourism infrastructures also contribute substantially to GDP, although they experienced a slowdown in the recent years. The construction and transport sectors are in full boom. The government encourages the new information technology and tourism sectors.

Foreign trade overview

Jordan is very open to international trade. The share of foreign trade in the country's GDP is around 135%. However, its trade balance is in deficit, due to its dependence on raw materials. Jordan is a member of the WTO and signed a free-trade agreement (FTA) with the USA in December 2001, removing customs duties on the majority of goods and services until 2010. Jordan has also signed an Agreement of Association with the EU. In June 2010, Jordan signed an accord with Turkey, Syria and Lebanon, in order to create a free-trade zone, with free circulation of goods and workforce between these four near-eastern countries.

The country’s top export partners in 2013 were the United States, Iraq, India, Saudia Arabia and the Lebanon. The main export commodities are fertilizers, pharmaceutical products (75% of the national production is exported), clothes & clothing accessories, and edible vegetables. Jordan is also one of the top five exporters of phosphates (together with the USA, China, Russia and Morocco).

The top import partners are Saudi Arabia, China, the United States, Italy and Germany. Jordan mainly imports mineral fuels & oils, vehicles, machinery, and electric & electronic equipment.

The EU was the second trade partner of Jordan after Saudia Arabia in 2013.

FDI

In a context where global foreign investment increased by 10.9% in 2013, in particular in Europe (+25.2%) and in Latin America (+17.5%), FDI flows to developing economies reached a new high of US$759 billion. However macroeconomic fragility and policy uncertainties are driving investors to caution.

The Jordanian economy has benefited from massive investment by the Gulf countries which increased from 74 million USD in 2002 to 3.1 billion USD in 2006. However, due to the international crisis in 2011, FDI has declined to 1.5 billion USD, a trend that has been maintained in 2012 and 2013. In order to boost these flows, the government has planned large-scale infrastructure projects (water, transportation, nuclear energy) for which it needs foreign and private funds. Jordan is trying to become a regional logistical crossroads, notably for electric and transport networks.

Investments are mainly concentrated in the field of real estate (residential and commercial), in financial services and in large tourism projects. The process of current programs of investment such as industrial projects, real estate and infrastructures, mainly financed by direct foreign investment, support the economic activity. Nevertheless, the restrictions on foreign credit and the loss of investor confidence could again limit the new influx of foreign direct investment in 2014, notably in the real estate sector. In 2013 the FDI influx totalled over USD 1.4 billion.

Information on the 2013 FDI influx in this region can be accessed in the Global Investment Trade Monitor published in January 2014 by the United Nations Conference on Trade and Development (UNCTAD).

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