Despite setbacks, opportunities remain for Jordan's economy, experts say

AMMAN — Although the Jordanian economy has been negatively affected by external financial and political shocks, opportunities still exist and need to be tapped, economists said on Saturday.

Jawad Anani — an economist, former Royal Court chief and a several-time minister — cited the 2008 global financial crisis as a major hit to world economies, adding that its effects were evident in Jordan after over a year.

He said the delay in effect was due to the Kingdom's minimal economic role in the international arena, in addition to the fact that around two thirds of foreign currency transfers entering Jordan come from Gulf Arab countries, which were also hit by the crisis.

Jordan's ability to address internal and border security threats and economic implications has gained the country the "respect" of financial decision makers and allowed financial support to the Kingdom, Anani argued.

Jordan faces substantial economic challenges that include the small size of its economy and market, limited natural resources, the "harsh" repercussions of the Arab Spring and the fluctuations of oil prices, in addition to the growing public debt, said Omar Razzaz, chairman of the Jordan Ahli Bank and chairman of the Jordan Strategy Forum.

He noted that Jordan's economic performance over the past decade has been positive, but witnessed a setback in 2008 and 2011, highlighting a significant drop in the country's ability to attract investments. But that relatively improved in 2014 due to fiscal interventions.

Razzaz said he sees an economic chance for Jordan in the reconstruction of Syria once the war comes to an end, adding that the demand on local products in African markets is increasing.

He added that Jordanian exports might have a possibility in entering new markets in Europe, based on deliberations in the recent London donor conference, which call for simplifying the EU rules of origin.

But most importantly, the government needs to become "entrepreneurial" in dealing with the private sector, and to shift from the rentier state approach to an inclusive and comprehensive approach of a productive economy, Razzaz argued.

Public Debt 

Former finance minister Mohammad Abu Hammour said public debt over the 70 years before 2010 has collectively reached JD11.5 billion, with significant spending on capital and infrastructure projects, while the debt almost double from 2010 until 2015 to reach JD22.8 billion, mostly to address current expenditures.

He warned that the "sharp" increase in public debt downgrades the Kingdom's performance in international financial and economic indexes, explaining that the public debt and budget deficit are two major indicators that local and foreign investors take seriously.

Abu Hammour noted that increasing taxes is not an effective measure to minimise the debt, as it could lead to tax evasion and as a result decrease economic activities and investments.

Saturday's conference, attended by former prime minister Abdul Salam Majali with participants from Saudi Arabia, Palestine, Syria, Algeria, Egypt, Sudan and Jordan, featured presentations of 37 specialised papers, according to Ahmad Seyam, head of its scientific and preparatory committee.

Majali highlighted the interconnectedness between achieving growth and development and the growth of the economy, adding that Jordan's "most valuable" export is “its brains”, whose foreign currency transfers to the Kingdom exceed JD3 billion annually.