Jordan’s trade deficit with GAFTA witnessed 104% increase in H1 2022

AMMAN — Jordan’s trade deficit with the Greater Arab Free Trade Area (GAFTA) increased in the first half 2022 by 104 per cent, to reach about JD1.534 billion, compared with the same period last year, which amounted to JD749 million, according to foreign trade data issued by the Department of Statistics (DoS).

The DoS stated that national exports and imports to and from GAFTA countries also increased in the first half of this year, compared with the same period in 2021. National exports increased by 15.1 per cent, to reach about JD1.239 billion, while imports increased by 52 per cent, totaling about JD2.773 billion.

According to the DoS data, Saudi Arabia topped the list of Jordan’s trade partners during the first half 2022. Exports to Saudi Arabia amounted to about JD390 million, while the Kingdom's imports from Saudi Arabia amounted to about JD1.460 billion, making the trade balance with Saudi Arabia about JD1.070 billion in the first half of this year.

Chairman of the Jordan Chamber of Commerce (JCC) Nael Kabariti said that there is great competition in the Arab world, as Arab industries and products are “very similar.”

“There is no diversity or integration in products, therefore the competition is huge. Jordan’s production ability is weak, in addition to the high production costs, while other countries have a market capable of internal and external marketing, so their product is larger with a lower cost,” Kabariti told The Jordan Times.

According to Kabariti, Jordan imports more than 85 per cent of its food and drink consumables, so the trade is balanced in favour of the other countries.

In order to reduce the gap, Kabariti said that Jordan needs to “reduce costs, especially energy costs, as well as taxes, and to increase agricultural and industrial production.”

Economist Wajdi Makhamreh said that the main reason of the trade balance deficit is the difference between imports and exports rates, as Jordan is a net importing country.

“After the pandemic, exports recovered slightly, but many Jordanian markets are still suffering. Imports rates also rose after the pandemic in order to enhance the recovery of the markets, so we need large imports,” Makhamreh told The Jordan Times.

Jordan needs to find new export markets and to strengthen the industrial sector more to be able to reduce the deficit in the trade balance, Makhamreh added.

He indicated that a large quantity of Jordanian investors have moved to other countries, contributing to the decline in the volume of exports.

According to Makhamreh, the decline in Jordanian and foreign investments plays a role in increasing the trade deficit, in addition to the failure to take advantage of available resources in Jordan.

“We need experts and strategic partners to help extract Jordan’s untapped resources, which would significantly contribute to increasing the volume of exports,” Makhamreh said.