Priority: Stimulating economic growth

The Prime Minister recently spoke to private sector leaders, stressing the shared goal of driving economic growth, boosting investments, supporting small and emerging businesses, and creating more job opportunities. This aligns with the Economic Modernisation Vision. To achieve this, the Prime Minister outlined major development projects set to begin this year, including the national water carrier, urban infrastructure, railways, public transportation, and other key sectors. These projects aim to attract both domestic and foreign investments, accelerating economic growth over the next four years.

Economic growth depends on increasing total demand and expanding the production of goods and services. This requires large-scale projects that give the economy a strong push, aligning with the "Big Push" development theory. However, growth must also be supported by attracting new investments, empowering existing businesses, and fostering small and emerging enterprises.

To accelerate this process, a set of short-term measures is necessary to generate long-term economic momentum. These include providing strong incentives for local investors while also offering targeted incentives for foreign investors, conditional on hiring Jordanian workers. Additionally, why not establish Public Joint-Stock Company (PJSC), a partnership between the public and private sectors, listed on the Amman Stock Exchange? This would help finance major infrastructure projects while also injecting fresh energy into Jordan’s financial markets.

Despite regional instability, Jordan attracted $1.3 billion in foreign direct investment during the first three quarters of 2024. This has helped strengthen foreign reserves and stimulate domestic demand. Moreover, improving the quality of government capital spending, as outlined in the 2026 budget, will ensure that public investments contribute to sustainable economic growth.

On the export front, supporting Jordanian exports through tax and customs incentives, land allocation, and infrastructure cost reductions could further boost trade. Programs such as export refunds can play a significant role. In 2024, Jordan’s national exports grew by 4.1%, exceeding expectations and reaching $12.1 billion. Additionally, reducing imports of goods that have local alternatives would help strengthen domestic industries. At the same time, a scientific review of the tax system, to determine the optimal income and sales tax rates, could help stimulate economic activity more effectively than the current fixed rates.

Can all of this be achieved despite rising national debt and declining foreign aid? The answer lies in a two-pronged approach: financial reform through better revenue collection and debt management, alongside growth stimulation via targeted economic measures. Jordan can no longer rely on borrowing to fuel growth as it did in the past when debt stood at 60 per cent of GDP. Today, with a much higher debt burden, this approach is no longer viable.

Looking ahead, the Central Bank projects Jordan’s economy to grow by 2.7 per cent in 2025, with further expansion to 3.5 per cent in the medium term. However, the Economic Modernization Vision aims for even higher growth rates, an ambitious goal that requires exceptional efforts, strategic planning, and deep economic expertise.

Raed Mahmoud Al-Tal is head of the Economics Department – University of Jordan- r.tal@ju.edu.jo