Consumer spending declines — commercial sector stakeholders

AMMAN – Jordanian consumers are not spending as much as they used to, according to commercial sector stakeholders. 

They told The Jordan Times in recent interviews that rising living costs due to an increase in the prices of several basic commodities, such as oil derivatives and electricity, have hit the purchasing power of Jordanians, particularly the middle class. 

“Jordanian consumers are exhausted by paying their inflating power and transportation bills,” said Ghassan Kharfan, vice president of the Jordan Chamber of Commerce. 

Purchasing power, particularly for the middle class, is declining because people’s incomes have been stable for years, while the cost of living has been rising, Kharfan added, citing official figures that estimate the average monthly income of Jordanians at around JD500, a figure he described as low. 

Taxes on many commodities have gone up over the past three years, he said, noting that higher levies on imported products and increasing shipment costs also affected consumer spending, as well as rising rents, mainly in key cities such as Amman and Irbid. 

“Merchants usually reflect additional costs such as power and water as well as freight, on consumers,” he said, also blaming instability in neighbouring countries for the declining commercial activity in the Kingdom. 

Syria was an important market for Jordan in terms of relatively cheap imports and as an export destination for many Jordanian-made products, according to Kharfan, who said demand for durable and non-durable goods has slowed down.

Amman Chamber of Commerce (ACC) President Issa Murad agreed with Kharfan.  

There is a slowdown in demand for most commodities, including food items, but not severe, Murad said, noting that sales of clothes, as well as furniture, home appliances and electronic devices, are on a decline. 

“Durable goods were the most hit by the slowdown,” he added, blaming the regional situation and rising living costs in the country for the sluggish sales.

Instability in the region has made consumers cautious so they buy their daily needs but do not spend on durable goods, Murad explained. 

He noted that the number of commercial establishments in Jordan is increasing, while consumer spending is either remaining stable or taking a downtrend. 

In the first nine months of this year, 7,261 commercial stores opened in Amman with a capital of JD1.2 billion, according to the ACC president. 

Murad also blamed official statements on difficult economic conditions for the slowdown in commercial activity. 

Officials should highlight Jordan’s stability and security instead of “frightening” investors and consumers by giving negative statements on the economy and repercussions of regional crises on the Kingdom, he remarked. 

Although the situation in Syria deprived the local market of inexpensive goods, merchants were able to replace imports from the neighbouring country with merchandise from China and Turkey, he noted. 

Describing the slowdown in demand for food items as unprecedented, Foodstuff Traders Association President Samer Jawabreh said the salaries of most Jordanians are no longer enough to cover their needs.

Regional events have also affected consumers’ sentiments, he added. 

“People are worried because of political troubles in the region. They are very cautious about spending,” he noted, estimating the drop in food sales so far this year at around 30 per cent, compared with 2013. 

Jawabreh claimed that food prices in the domestic market remained stable, with the prices of basic commodities dropping due to a rise in the global production of wheat and other essential crops. 

The sector leaders expressed hopes that 2015 would be a better year for the Kingdom’s economy and that commercial activity would pick up.