IMF predicts Jordan economy to rebound in 2021, says fund stands ready with support

AMMAN — The International Monetary Fund (IMF) is ready to provide Jordan with additional assistance if needed, as the fund expects the country’s economy to contract 3.7 per cent this year before it rebounds in 2021 and grows by 3.7 per cent.

As the COVID-19 pandemic inflicts high and rising human costs worldwide, the health crisis is having a severe impact on economic activity. As a result, the global economy is projected to contract sharply by 3 per cent in 2020, much more severely than during the 2008-09 financial crisis, according to the IMF.

Jordan’s economy, like other economies in the region, is affected by the coronavirus, Jihad Azour, Director of the Middle East and Central Asia Department at the IMF, said during a virtual press conference on Wednesday.

“In addition to that, Jordan also hosts a large number of refugees, which adds an additional social and humanitarian challenge for the refugees and the host communities as well,” he said.

“We are in constant dialogue with the authorities [in Jordan] and we are ready to support them if they need additional assistance,” Azour said, adding: “We are also supporting them in terms of policies and technical assistance to help them cope with the shock.”

The IMF, which forecasts the region’s economy to contract by 3.3 per cent in 2020, compared to last year’s projected growth of 0.3 per cent, expects inflation in Jordan to narrow to 0.2 per cent in 2020 before it widens to 1.6 per cent in 2021.

According to its 2020 Regional Economic Outlook for the Middle East, North Africa and Central Asia, the IMF expects the current account balance to stand at 5.8 per cent in 2020 and to reach 5.3 per cent in 2021.

Referring to the fund’s recently endorsed $1.3 billion Extended Fund Facility, which seeks to support Jordan, Azour said the programme has been adjusted in order to take into account the changesthat the coronavirus is inflicting on Jordan.

“We have introduced an adjustment to allow the government to increase spending on the social aspect, in particular on healthcare issues. This programme was designed to help Jordan recover and achieve the higher level of growth that the country needs and can get based on the government priorities that were geared towards improving the attractiveness of the Jordanian economy, increasing investment and growth and maintaining the macroeconomic stability and addressing the debt issue and restructuring and improving the efficiency of some of the key sectors like the energy and electricity,” he said.

The IMF’s forecast for the region is worse than that for the global economy, which is expected to contract by 3 per cent this year.

According to the IMF, oil exports are expected to decline by more than $250 billion across the region.

Saudi Arabia's GDP will shrink 2.3 per cent, while the economy of the UAE will contract by 3.5 per cent, and Kuwait, OPEC's (Organisation of the Petroleum Exporting Countries) fourth-largest oil producer, will shrink by 1.1 per cent.

Looking ahead, growth in regional oil exporters is expected to rebound in 2021, reaching 4.7 per cent, according to the fund.