JORDAN ECONOMIC MONITOR Strength Amidst Strain: Jordan’s Economic Resilience Summer 2024 Jordan Economic Monitor Strength Amidst Strain: Jordan’s Economic Resilience Summer 2024 Middle East and North Africa Region © 2024 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy, completeness, or currency of the data included in this work and does not assume responsibility for any errors, omissions, or discrepancies in the information, or liability with respect to the use of or failure to use the information, methods, processes, or conclusions set forth. 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TABLE OF CONTENTS Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v Acronyms and Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .vii Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix ‫ امللخص التنفيذي‬. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv 1.  Recent Economic Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.  Real Sector and Labor Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 2.  Public Finance Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 3.  External Sector Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 4.  Monetary Policy and Inflation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2.  Outlook and Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 iii List of Figures Figure 1 Economic Activity Continued to Slow Down in Q1-2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Figure 2 Agriculture Sector Growth Acceleration in 2023 Coincided with the Recovery of Rainfall Volumes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Figure 3 Tourist Arrivals Showing Signs of Recovery after Reaching a Trough in March 2024 . . . . . . . . . . . .2 Figure 4 CG Fiscal Deficit Widened on Annual Basis in 5M-2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Figure 5 Despite Higher Grants, Revenues in 5M-2024 Were Affected by Lower Income and Profit Tax Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Figure 6 The Annual Increase in Expenditure in 5M-2024 Was Mainly Driven by Higher Interest Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 Figure 7 Debt Increased in 2023, Mainly Driven by Higher Foreign Currency debt . . . . . . . . . . . . . . . . . . . . . . 5 Figure 8 SSIF Holdings of Debt Increased, Which Helped Tame the Increase in the Consolidated Debt Ratio in 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Figure 9 Current Account Deficit Widened in Q1-2024, After Narrowing in 2023 to the Lowest Level since 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 Figure 10 Import Declines Prior to Oct 2023 Stemmed Mainly from Lower Prices, while the Later Decline Resulted Mainly from Lower Volumes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 Figure 11 Domestic Exports Decline in 2023 Was Mainly Driven by Lower Potassium and Phosphate Exports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Figure 12 Export Volumes through Al-Aqaba Port Declined Significantly between January and May 2024 . . 8 Figure 13 Import Volumes through Al-Aqaba Port Declined Significantly between January and May 2024 . . 8 Figure 14 After Significant Deceleration in 8M-2023, Annual Headline Inflation Rate Accelerated Slightly since September 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Figure 15 The Acceleration Since September 2023 Has Been Supported by Monthly Dynamics, which Remains Broadly Muted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Figure 16 Monthly Inflation since September 2023 Was Supported by Positive Contribution from Food and Fuel Items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Figure 17 Real Interest Rates Stabilized after Reaching a Peak in October 2023 . . . . . . . . . . . . . . . . . . . . . . . 10 Figure 18 The REER Appreciated on Annual Terms in April and May 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Figure 19 Broad Money Annual Growth Rate Remains Low, with Only a Modest Uptick Observed Recently . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Figure 20 Improved NFA Contribution to Broad Money Annual Growth Rate . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Figure B.1 The Decline in Tourist Arrivals since October 2023 Was Driven by Fewer Europeans, which more than Offset the Increase in Tourists from the GCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 Figure B.2 Higher Spending from GCC and other Arab Tourists whose Arrivals Increased Helped Contain the Decline in Total Travel Receipts since October 2023 . . . . . . . . . . . . . . . . . . . . . . 9 Figure B.3 Compared to Previous Shocks, the Overall and Sectoral Annual Growth Rates in Q4-2023 Shows a Relatively Limited Impact from the Current Conflict so Far . . . . . . . . . . . . . . . . . 15 Figure B.4 Potential Impact of Lower Travel Receipts on CAD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 List of Tables Table 1 Jordan Selected Economic and Fiscal Indicators 2021–26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 List of Boxes Box 1 Tourism Dynamics: Shifts in Arrivals and Receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Box 2 An Alternative Scenario: The Economic Impact of Escalating Regional Conflict . . . . . . . . . . . . . . . 14 iv JORDAN ECONOMIC MONITOR – STRENGTH AMIDST STRAIN: JORDAN’S ECONOMIC RESILIENCE PREFACE T he Jordan Economic Monitor (JEM) provides The Jordan Economic Monitor has been an update on key economic developments completed under the guidance of Eric Le Borgne and policies over the past six months. It also (Practice Manager), Norbert Fiess (Lead Economist), presents findings from recent World Bank analytic Holly Benner (Resident Representative), and Jean- work on Jordan. The JEM places them in a longer-term Christophe Carret (Regional Director). and global context and assesses the implications of The findings, interpretations, and conclusions these developments and other changes in policy on expressed in this Monitor are those of the World Bank the outlook for Jordan. Its coverage ranges from the staff and do not necessarily reflect the views of the macro-economy to financial markets to indicators of Executive Board of The World Bank or the govern- human welfare and development. It is intended for ments they represent. a wide audience, including policymakers, business For questions and comments on the content leaders, financial market participants, and the of this publication, please contact Zeina Alsharkas community of analysts and professionals engaged (zalsharkas@worldbank.org). Nabeel Darweesh in Jordan. The cut-off data for this Jordan Economic (External Affairs Officer) is the lead on communica- Monitor is 10 July-2024. tions, outreach, and publishing. To be included The Jordan Economic Monitor is a product of on an email distribution list for this or other related the Middle East and North Africa (MENA) unit in the publications and for questions from the media, please Macroeconomics, Trade and Investment (MTI) Global contact him at ndarweesh@worldbankgroup.org. For Practice in the World Bank Group. This edition was led information about the World Bank and its activities in by Zeina Alsharkas (Economist, MTI), with significant Jordan, including e-copies of this publication, please contribution from Ramy Oraby (Consultant), Erwin visit www.worldbank.org/en/country/jordan. Knippenberg (Economist), Sarah Farid and Xinyue Wang (Consultants). v ACRONYMS AND ABBREVIATIONS 5M-2024 First five months of 2024 NFA Net foreign assets 5M-2023 First five months of 2023 Q1 First Quarter CAD Current Account deficit Q2 Second Quarter CBJ Central Bank of Jordan Q4 Fourth Quarter CG Central Government T-bills Treasury bills CPI Consumer Price Index T-bonds Treasury bonds COVID-19 Coronavirus Disease 2019 ToT Terms of Trade DoS Department of Statistics REER Real Effective Exchange Rate FDI Foreign direct investment RHS Right-hand-side GDP Gross Domestic Product SDR Special drawing rights GoJ Government of Jordan ToT Terms of Trade GNFS Goods and nonfactor services SSC Social Security Corporation JEM Jordan Economic Monitor SSIF Social Security Investment Fund JD Jordanian Dinar UNHCR United Nations High Commissioner LHS Left-hand-side for Refugees MENA Middle East and North Africa U.S. United States MOF Ministry of Finance USD United States Dollar MTI Macroeconomics, Trade and WAJ Water Authority of Jordan Investment WB World Bank NDA Net domestic assets WBG World Bank Group NEPCO National Electricity Power Company vii EXECUTIVE SUMMARY J ordan’s economy demonstrated resilience increased to 15.5 percent in Q1-2024, which remains in 2023, achieving modest growth amidst lower than the regional average. Despite the lower a challenging regional environment. Real annual average, the labor force participation inched GDP growth accelerated to 2.7 percent in 2023, up up slightly in the last quarter of 2023, supported by from 2.6 percent in 2022. Economic growth was an increase in female participation. broad-based, with manufacturing growth hitting a In line with global trends, inflation decel- record high, and robust performances in services erated significantly in 2023 and is expected and agriculture. In the services sector, restaurants to remain contained in 2024. Headline inflation and hotels recorded the second highest growth since rate decelerated to 2.1 percent in 2023, down from 2017. Going forward, growth is expected to slow to an average of 4.2 percent in the previous year. The 2.4 percent in 2024 affected by the conflict in the deceleration was supported by a favorable base Middle East, with a slight recovery to 2.6 percent effect, favorable international commodity prices and projected thereafter. monetary policy tightening. Policy rates were held Despite the (small) economic growth unchanged at 7.25 percent since July 2023, while acceleration, labor market outcomes remain real interest rates remain positive. Looking forward, sluggish, with some signs of improvement in the inflation is anticipated to remain contained in 2024, second half of 2023. Unemployment continued to supported by the lagged effects of monetary policy decline for the second consecutive year, reaching tightening and relatively stable international com- 22.0 percent in 2023, compared to 22.8 percent in the modity prices, notwithstanding some transitory previous year. This included a decline in both males impact from the conflict in the Middle East, including and female unemployment. More recently, the unem- higher international oil prices as well as higher ship- ployment rate was stable at 21.4 percent in Q1-2024, ping costs due to the Red Sea disruptions. unchanged from its level in the previous quarter. Labor Fiscal consolidation continued in 2023, force participation, however, declined for the second mainly driven by a reduction in current expen- consecutive year, recording 33.2 percent in 2023, diture, while debt levels remained elevated. The compared to 33.4 percent in 2022. Female labor Central Government’s fiscal deficit narrowed by force participation recorded 14.0 percent in 2023, 0.5 percentage points to 5.1 percent of GDP in 2023. broadly unchanged since 2021, staying among the The decline was supported by lower expenditure, lowest in the world. More recently, female participation which outweighed the drop in revenues. Expenditure ix reduction was largely due to the phasing out of fuel The economic impact of the current subsidies, despite an increase in interest payments conflict in the Middle East has been broadly and capital expenditure. Meanwhile, revenues went contained so far, but a longer and/or broader down as both tax revenues and foreign grants declined, conflict would likely have a bigger impact in despite an increase in non-tax revenue. Despite fiscal 2024. Real GDP growth continued to decelerate consolidation, both consolidated and unconsolidated to reach 2.0 percent in Q1-2024, down from 2.3 general government debt levels continued to rise, percent in Q4-2023 and 2.7 percent in Q3-2023. reaching 89.2 percent of GDP and 113.8 percent of The deceleration since Q3-2023 was mainly due to GDP, respectively, in 2023, with foreign currency debt lower contribution from sectors with higher exposure being a significant contributor. to the conflict and the associated trade disruption Going forward, fiscal consolidation is in the Red Sea, such as transport and communica- expected to proceed slowly. Key drivers are tion, manufacturing, wholesale and retail trade, and revenue-boosting measures and a potential easing restaurants and hotels. The unemployment rate was of monetary policy supporting higher domestic stable at 21.4 percent in Q1-2024, unchanged from revenues. The primary (i.e., excl. interest payments) its level in the previous quarter. The current account fiscal deficit is expected to narrow further in 2024 and deficit widened by USD310.2 million on annual basis to turn into a small surplus by 2025. Higher interest to USD1.1 billion in Q1-2024 due to lower travel payments are expected to cause a slight increase in receipts and higher trade deficit. High-frequency the overall fiscal deficit in 2024 but it is then expected indicators point to a significant decline in both to resume its narrowing in subsequent years. While import and export volumes through the Aqaba port financial challenges in the electricity and water sec- between January and May 2024, notwithstanding tors are projected, under current policies, to keep some recovery in March 2024. the unconsolidated general government debt level Jordan’s EMBI spreads reverted to its pre- elevated in the near term, consolidated debt is pro- October 7, 2023 levels by December 2023, after jected to decline gradually. a transitory spike in October and November 2023. The external sector improved markedly S&P affirmed its ‘BB–’ long- and short-term foreign in 2023, with the current account deficit nar- and local currency sovereign credit ratings on Jordan rowing to the lowest level since 2019, supported with a stable outlook in September 2024. Moody’s by a lower trade deficit and a surge in tourism upgraded Jordan’s sovereign credit ratings to ‘Ba3’ receipts. The current account deficit narrowed to from ‘B1’ with a stable outlook in May 2024, the first 3.7 percent of GDP in 2023, down from 7.8 percent of upgrade by Moody’s since 2003. GDP in the previous year. This was driven by a lower Tourist arrivals between October 2023 trade deficit as a contraction in imports which was and June 2024 have declined by 7.5 percent supported by favorable prices outpaced the decline compared with the same period in the previous in exports. Moreover, the services surplus increased year, but have been gradually recovering on following record high travel receipts that reached annual terms since March 2024. The most sig- 14.5 percent of GDP in 2023. The capital and financial nificant decreases were seen in November 2023 account surplus also increased in 2023, mainly due with the start of the ground operations in Gaza and to a significant rise in portfolio investments due to March 2024 with the seasonal impact of fewer tour- a USD1.25 billion Eurobond issuance by MoF. This ists during the holy month of Ramadan recording outpaced the decline in FDIs and other investment in annual decline rates of 16.3 percent and 25.6 2023, relative to the previous year. The improvement percent, respectively. Since the trough in March in the current account deficit and larger capital and 2024, total tourist arrivals have been recovering on financial account surplus supported the increase in an annual basis, registering the first annual increase CBJ’s gross usable foreign reserves, which reached at 1.5 percent in June 2024. USD 17.3 billion (around 7.0 months of imports) at the Primary fiscal surplus (excluding foreign end of 2023. grants) declined by 5.6 percent on annual basis x JORDAN ECONOMIC MONITOR – STRENGTH AMIDST STRAIN: JORDAN’S ECONOMIC RESILIENCE in 5M 2024 as fiscal consolidation slows down shipping costs in January 2024 to help contain the affected by the conflict. The overall fiscal deficit of impact of high shipping costs attributed to trade the central government (CG) widened by 34.5 percent disruptions in the Red Sea. on annual basis in 5M-2024. This was mainly due to an Jordan’s medium-term outlook is weighed annual increase in interest payments and an annual by uncertainties surrounding the conflict in the decline in income and profit tax revenue, which offset Middle East. While the broader economy has so far higher foreign grants, sales tax revenue and non-tax shown some resilience, trade has been disrupted and revenue. In addition to the deceleration of economic tourism has been adversely impacted by the conflict. activity growth, the decline in trade volumes through A sustained impact on travel could reverse recent the Aqaba port following the eruption of the conflict, improvements in the external sector. Wider disruptions the government of Jordan introduced a temporary coming from across the border would pose further risks exemption on custom duties and sales taxes on sea to trade, oil prices, and consumer behavior changes. Executive Summary xi ‫الملخص التنفيذي‬ ‫األساس وانخفاض األسعار العاملية للسلع وتشديد السياسة النقدية‪.‬‬ ‫كام ظلت أسعار الفائدة األساسية دون تغيري عند مستوى ‪ 7.25٪‬منذ‬ ‫متوز ‪ ،2023‬يف حني ظلت أسعار الفائدة الحقيقية عند مستويات‬ ‫ظهر االقتصاد األردين صالبة يف عام ‪ 2023‬وسط بيئة إقليمية‬ ‫صعبة‪ .‬فقد تسارع منو الناتج املحيل اإلجاميل الحقيقي إىل ‪2.7٪‬‬ ‫يف عام ‪ ،2023‬مقابل ‪ 2.6٪‬يف عام ‪ .2022‬وشمل النمو االقتصادي‬ ‫أ‬ ‫موجبة‪ .‬ومن املتوقع أن يظل التضخم تحت السيطرة يف عام ‪،2024‬‬ ‫يف عام ‪ 2023‬جميع القطاعات‪ ،‬حيث سجل معدل منو الصناعات‬ ‫مدعوما باآلثار املمتدة لتشديد السياسة النقدية واالستق رار النسبي‬ ‫التحويلية ارتفاعا قياسيا وحقق قطاعي الخدمات والزراعة أداء قويا‬ ‫لألسعار العاملية للسلع‪ ،‬عىل الرغم من بعض اآلثار املؤقتة لل رصاع‬ ‫يف عام ‪ .2023‬ففي قطاع الخدمات‪ ،‬سجلت املطاعم والفنادق ثاين‬ ‫يف الرشق األوسط‪ ،‬مبا يف ذلك ارتفاع أسعار النفط العاملية‪ ،‬فضال عن‬ ‫أعىل معدل منو لها منذ عام ‪ .2017‬ويف املرحلة املقبلة‪ ،‬من املتوقع أن‬ ‫ارتفاع تكاليف الشحن بسبب االضط رابات يف البحر األحم ر‪.‬‬ ‫يتباطأ النمو إىل ‪ 2.4٪‬يف عام ‪ 2024‬متأث را بتداعيات ال رصاع يف الرشق‬ ‫واستمر ضبط أوضاع املالية العامة يف عام ‪ ،2023‬مدعوما‬ ‫األوسط‪ ،‬مع توقع انتعاش طفيف إىل ‪ 2.6٪‬بعد ذلك‪.‬‬ ‫يف املقام األول بانخفاض النفقات الجارية‪ ،‬يف حني ظلت مستويات‬ ‫عىل الرغم من التسارع البسيط ىف وترية النمو االقتصادي‪،‬‬ ‫الدين مرتفعة‪ .‬تقلص عجز املوازنة العامة للحكومة املركزية مبقدار‬ ‫ال يزال انعكاس ذلك عىل مؤرشات سوق العمل ضعيفا يف عام ‪،2023‬‬ ‫‪ 0.5‬نقطة مئوية إىل ‪ 5.1٪‬من الناتج املحيل اإلجاميل يف عام ‪.2023‬‬ ‫مع وجود بعض التحسن يف النصف الثاىن من العام‪ .‬استمر معدل‬ ‫وكان هذا االنخفاض مدعوما بانخفاض اإلنفاق‪ ،‬الذي فاق االنخفاض‬ ‫البطالة يف االنخفاض للعام الثاين عىل التوايل‪ ،‬حيث سجل ‪ 22.0٪‬يف‬ ‫يف اإلي رادات‪ .‬ويعزى انخفاض اإلنفاق إىل حد كبري إىل اإللغاء التدريجي‬ ‫عام ‪ ،2023‬مقابل ‪ 22.8٪‬يف العام السابق‪ .‬وشمل االنخفاض كال من‬ ‫لدعم الوقود‪ ،‬عىل الرغم من زيادة مدفوعات الفائدة والنفقات‬ ‫الذكور واإلناث‪ .‬مؤخ را ً‪ ،‬كان معدل البطالة ثاب تً ا عند ‪ 21.4٪‬يف الربع‬ ‫الرأساملية‪ .‬ويف الوقت نفسه‪ ،‬انخفضت اإلي رادات — كنسبة من‬ ‫األول من عام ‪ ،2024‬دون تغيري عن مستواه يف الربع السابق‪ .‬ولكن‬ ‫الناتج املحيل االجاميل — مع ت راجع كل من اإلي رادات الرضيبية واملنح‬ ‫من ناحية أخرى‪ ،‬استأنف معدل مشاركة القوى العاملة ىف سوق‬ ‫األجنبية‪ ،‬عىل الرغم من زيادة اإلي رادات غري الرضيبية‪ .‬وعىل الرغم‬ ‫العمل ت راجعه للعام الثاين عىل التوايل‪ ،‬حيث سجل ‪ 33.2٪‬يف عام‬ ‫من استم رار ضبط أوضاع املالية العامة‪ ،‬استمرت مستويات الدين‬ ‫‪ ،2023‬مقابل ‪ 33.4٪‬يف العام السابق‪ .‬وسجلت مشاركة اإلناث ‪14.0٪‬‬ ‫الحكومي املوحد وغري املوحد يف االرتفاع‪ ،‬لتصل إىل ‪ 89.2٪‬من إجاميل‬ ‫يف عام ‪ ،2023‬دون تغيري يذكر منذ عام ‪ ،2021‬لتبقى من بني أدىن‬ ‫الناتج املحيل اإلجاميل و‪ 113.8٪‬من إجاميل الناتج املحيل اإلجاميل‪ ،‬عىل‬ ‫املعدالت يف العامل‪ .‬ويف اآلونة األخرية‪ ،‬زادت مشاركة اإلناث إىل ‪15.5٪‬‬ ‫الرتتيب يف عام ‪ ،2023‬وكان ارتفاع الدين بالعمالت األجنبية مساهام‬ ‫يف الربع األول لعام ‪ ،2024‬وهي ال تزال أقل من املتوسط اإلقليمي‪.‬‬ ‫كب ريا يف ذلك‪.‬‬ ‫وعىل الرغم من انخفاض املتوسط السنوي‪ ،‬ارتفعت نسبة املشاركة يف‬ ‫ويف املرحلة املقبلة‪ ،‬ومن املتوقع أن يستمر ضبط أوضاع‬ ‫القوى العاملة ارتفاعا طفيفا يف الربع األخري من عام ‪ ،2023‬مدعومة‬ ‫املالية العامة وان كان بوترية أقل نسبيا‪ ،‬مدعوما بزيادة اإلي رادات‬ ‫بزيادة مشاركة املرأة‪.‬‬ ‫املحلية نتيجة اتخاذ تدابري لتعزيز اإلي رادات وتخفيف محتمل‬ ‫ومتاشي اً مع االتجاهات العاملية‪ ،‬ت راجع التضخم بشكل كبري‬ ‫للسياسة النقدية‪ .‬ومن املتوقع أن يتقلص عجز املالية العامة األويل يف‬ ‫يف عام ‪ 2023‬ومن املتوقع أن يظل تحت السيطرة يف عام ‪ .2024‬ت راجع‬ ‫عام ‪ 2024‬وأن يتحول إىل فائض صغري بحلول عام ‪ .2025‬ومن املتوقع‬ ‫معدل التضخم العام إىل ‪ 2.1٪‬يف عام ‪ ،2023‬منخفضا من متوسط‬ ‫أن يؤدي ارتفاع مدفوعات الفائدة إىل زيادة طفيفة يف العجز الكيل‬ ‫قدره ‪ 4.2٪‬يف العام السابق‪ .‬وكان هذا التباطؤ مدعوما بتأثري فرتة‬ ‫‪xiii‬‬ ‫كام عادت هوامش مؤرش سندات األسواق الناشئة الخاصة‬ ‫يف عام ‪ ،2024‬ولكن من املتوقع بعد ذلك أن يستأنف انخفاضه يف‬ ‫باألردن — والتى تعكس املخاطر السيادية — إىل مستويات ما قبل‬ ‫السنوات الالحقة‪ .‬ويف حني أن التحديات املالية يف قطاعي الكهرباء‬ ‫‪ 7‬ترشين األول ‪ 2023‬بحلول كانون األول ‪ ،2023‬بعد ارتفاع مؤقت‬ ‫واملياة قد تبقي مستوى دين الحكومة العامة غري املوحد مرتفعا يف‬ ‫يف ترشين األول وترشين الثاين ‪ .2023‬وأكدت ‪ S&P‬تصنيفها االئتامين‬ ‫املدى القريب‪ ،‬فمن املتوقع أن ينخفض مستوى دين الحكومة العامة‬ ‫السيادي طويل وقصري األجل بالعملة األجنبية واملحلية الخاص‬ ‫املوحد تدريجيا‪.،‬‬ ‫باألردن عند مستوى «–‪ ،»BB‬مع نظرة مستقبلية مستقرة يف آذار‬ ‫وشهد القطاع الخارجي تحسنا ملحوظا يف عام ‪ ،2023‬مع‬ ‫‪ .2024‬ورفعت وكالة موديز يف أيار ‪ 2024‬التصنيف االئتامين السيادي‬ ‫تقلص عجز الحساب الجاري إىل أدىن مستوى له منذ عام ‪،2019‬‬ ‫لألردن من «‪ »B1‬إىل «‪ »Ba3‬وذلك للمرة األويل منذ عام ‪ 2003‬مع‬ ‫مدعوما بانخفاض العجز التجاري وطفرة يف عائدات السياحة‪.‬‬ ‫نظرة مستقبلية مستقرة‪.‬‬ ‫وتقلص عجز الحساب الجاري إىل ‪ 3.7٪‬من الناتج املحيل اإلجاميل‬ ‫انخفض عدد السائحني الوافدين بني ترشين األول ‪2023‬‬ ‫يف عام ‪ ،2023‬منخفضا من ‪ 7.8٪‬من الناتج املحيل اإلجاميل يف العام‬ ‫وحزي ران ‪ 2024‬بنسبة ‪ 7.5٪‬مقارنة بالفرتة نفسها من العام السابق‪،‬‬ ‫السابق‪ .‬وكان ذلك مدفوعا بانخفاض العجز التجاري حيث فاق‬ ‫لكنه يتعاىف تدريجيا عىل أساس سنوي منذ آذار ‪ .2024‬وكانت‬ ‫انكامش الواردات — الذي دعمه تحسن األسعار العاملية للسلع —‬ ‫أكرب االنخفاضات — عيل أساس سنوي — يف ترشين الثاين ‪2023‬‬ ‫االنخفاض يف الصادرات‪ .‬عالوة عىل ذلك‪ ،‬زاد فائض الخدمات يف أعقاب‬ ‫مع بدء العمليات الربية يف غزة‪ ,‬و آذار ‪ 2024‬مع التأثري املوسمي‬ ‫ارتفاع قيايس يف عائدات السفر التي بلغت ‪ 14.5٪‬من الناتج املحيل‬ ‫النخفاض عدد السائحني خالل شهر رمضان املبارك حيث سجل عدد‬ ‫اإلجاميل يف عام ‪ .2023‬كام زاد فائض حساب رأس املال والحساب املايل‬ ‫السائحني انخفاض سنوي بلغ ‪ 16.3٪‬و‪ 25.6٪‬عىل الرتتيب‪ .‬وبعد‬ ‫يف عام ‪ ،2023‬ويرجع ذلك أساسا إىل االرتفاع الكبري يف استثامرات‬ ‫تحقيق أدىن مستوى يف مارس‪/‬آذار ‪ ،2024‬بدء تعاىف عدد السائحني‬ ‫املحافظ بسبب إصدار وزارة املالية سندات دولية بقيمة ‪ 1.25‬مليار‬ ‫الوافدين عىل أساس سنوي‪ ،‬ليسجل أول زيادة سنوية بلغت ‪1.5٪‬‬ ‫دوالر‪ .‬وهو ما حد من تأثري انخفاض االستثامرات األجنبية املبارشة‬ ‫يف حزي ران ‪.2024‬‬ ‫واالستثامرات األخرى يف عام ‪ ،2023‬مقارنة بالعام السابق‪ .‬وساهم‬ ‫انخفض الفائض األويل للاملية العامة (بعد استبعاد املنح)‬ ‫التحسن يف عجز الحساب الجاري وزيادة الفائض يف حساب رأس املال‬ ‫بنسبة ‪ 5.6٪‬عىل أساس سنوي يف األشهر الخمسة األوىل من عام‬ ‫والحساب املايل يف زيادة احتياطيات النقد األجنبي القابلة لالستخدام‬ ‫‪ 2024‬مع تباطؤ ضبط أوضاع املالية العامة بفعل ال رصاع‪ .‬واتسع‬ ‫لدى البنك املركزي األردين‪ ،‬والتي بلغت ‪ 17.3‬مليار دوالر (حوايل ‪7.0‬‬ ‫العجز الكيل للحكومة املركزية بنسبة ‪ 34.5٪‬عىل أساس سنوي يف‬ ‫أشهر من الواردات) يف نهاية عام ‪.2023‬‬ ‫األشهر الخمسة األوىل من عام ‪ .2024‬ويرجع ذلك يف املقام األول إىل‬ ‫حتى اآلن‪ ،‬تم احتواء التأثري االقتصادي لل رصاع الحايل يف‬ ‫ارتفاع مدفوعات الفائدة وانخفاض إي رادات رضيبة الدخل واألرباح‬ ‫الرشق األوسط بشكل كبري‪ ،‬ولكن اطالة امد ال رصاع و‪/‬أو أتساع نطاقه‬ ‫عىل أساس سنوي ‪ ،‬مام حد من تأثري ارتفاع املنح األجنبية وإي رادات‬ ‫قد ينتج عنه تأث ريا اقتصاديا أكرب من املتوقع ىف السيناريو األساىس‬ ‫رضيبة املبيعات واإلي رادات غري الرضيبية عيل أساس سنوي‪ .‬باإلضافة‬ ‫لعام ‪ .2024‬واصل منو الناتج املحيل اإلجاميل الحقيقي ت راجعه ليصل‬ ‫إىل تباطؤ منو النشاط االقتصادي وانخفاض حجم التجارة عرب ميناء‬ ‫إىل ‪ 2.0٪‬يف الربع األول من عام ‪ ،2024‬منخفضا من ‪ 2.3٪‬يف الربع األخري‬ ‫العقبة يف أعقاب اندالع ال رصاع‪ ،‬فقد طبقت الحكومة األردنية إعفاء‬ ‫من عام ‪ 2023‬و‪ 2.7٪‬يف الربع الثالث من عام ‪ .2023‬ويرجع التباطؤ‬ ‫مؤقتا من الرسوم الجمركية ورضائب املبيعات عىل تكاليف الشحن‬ ‫منذ الربع الثالث من عام ‪ 2023‬يف املقام األول إىل انخفاض مساهمة‬ ‫البحري يف كانون الثاين ‪ 2024‬للمساعدة يف احتواء تأثري ارتفاع تكاليف‬ ‫القطاعات األكرث تأث را بال رصاع وما يرتبط به من تعطل للتجارة يف البحر‬ ‫الشحن الناجم عن تعطل التجارة يف البحر األحم ر‪.‬‬ ‫األحم ر‪ ،‬مثل النقل واالتصاالت‪ ،‬والصناعات التحويلية‪ ،‬وتجارة الجملة‬ ‫اآلفاق االقتصادية لألردن عىل املدى املتوسط مثقلة بعدم‬ ‫والتجزئة‪ ،‬واملطاعم والفنادق‪ .‬واستقر معدل البطالة عند ‪ 21.4٪‬يف‬ ‫اليقني املحيط بال رصاع يف الرشق األوسط‪ .‬عىل الرغم من أن االقتصاد‬ ‫الربع األول لعام ‪ ،2024‬دون تغيري عن مستواه يف الربع السابق‪ .‬واتسع‬ ‫األردين أظهر بعض الصالبة‪ ،‬إال أن التجارة تعطلت وتأثرت السياحة‬ ‫عجز الحساب الجاري مبقدار ‪ 310.2‬مليون دوالر عىل أساس سنوي‬ ‫سلب اً بسبب ال رصاع‪ .‬قد يؤدي استم رار التأثري عىل عائدات السفر إىل‬ ‫ليصل إىل ‪ 1.1‬مليار دوالر يف الربع األول من عام ‪ 2024‬بسبب انخفاض‬ ‫عكس التحسنات األخرية يف القطاع الخارجي‪ .‬كام أن أي اضط رابات‬ ‫عائدات السياحة وارتفاع العجز التجاري‪ .‬وتشري املؤرشات إىل انخفاض‬ ‫أوسع تأيت من عرب الحدود ستشكل مخاطر إضافية عىل التجارة‬ ‫كبري يف كل من حجم الواردات والصادرات عرب ميناء العقبة بني يناير‬ ‫وأسعار النفط وتغ ريات يف سلوك املستهلك‪.‬‬ ‫ومايو ‪ ،2024‬عىل الرغم من حدوث بعض االنتعاش يف مارس ‪.2024‬‬ ‫‪xiv‬‬ ‫‪JORDAN ECONOMIC MONITOR – STRENGTH AMIDST STRAIN: JORDAN’S ECONOMIC RESILIENCE‬‬ 1 RECENT ECONOMIC DEVELOPMENTS 1.  Real Sector and Labor Market broad-based, with manufacturing registering a record high, while other sectors sustained strong Jordan’s economy continued to grow performance. Manufacturing witnessed a notable despite decelerating affected by the pickup in both its annual growth (3.6 percent—the conflict in the Middle East. Labor market highest since 2011) and its contribution to GDP growth outcomes remained weak, despite slight (0.6 percentage points) during 2023. In services, recent improvement. restaurants and hotels recorded its second highest growth (5.2 percent) since 2017, which benefited Economic growth continued to decelerate from record-high travel receipts in 2023, particularly following the onset of the conflict in the Middle pre-October 2023. Mining and quarrying maintained East, driven mainly by lower contribution from the its growth, registering 5.6 percent in 2023. Despite a services sector. After recording a 2.7 percent growth slight slowdown in the second half of 2023, agriculture rate prior to the conflict,1 real GDP growth rate slowed experienced a robust growth of 5.9 percent in 2023, down to 2.3 percent in Q4-2023 and 2.0 percent up from 3.9 percent in 2022, which coincided with a in Q1-2024 (Figure 1). The deceleration since Q3- strong growth in agricultural exports, particularly fruits 2023 was mainly driven by a lesser contribution from and vegetables in 2023 and the recovery of rainfall sectors with higher exposure to the conflict and the volume in the previous season2 (Figure 2). associated trade disruption in the Red Sea, such as transport and communication, manufacturing, wholesale and retail trade, and restaurants and hotels. 1 DoS has revised national accounts data for 2022 and 2023. Real GDP growth rate for 2022 was adjusted to Despite slower growth in Q4-2023, Jordan’s 2.6% (previously 2.4%), and for 2023 to 2.7% (previously economy maintained modest growth in 2023. 2.6%), with slight changes in sectoral decomposition. Real GDP growth rate accelerated by 0.1 p.p. to 2 According to Jordan Meteorological Department, the 2.7 percent in 2023. The economic growth was rainy season usually lasts from Mid-September to May. 1 FIGURE 1 • Economic Activity Continued to Slow Agriculture Sector Growth FIGURE 2 •  Down in Q1-2024 Acceleration in 2023 Coincided with (percent/percentage points) the Recovery of Rainfall Volumes (percent) 6 10 60 4 40 5 2 20 0 0 0 –20 –2 –5 –40 –4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 –10 –60 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 2024 Agriculture Industry Services Agriculture sector output in constant prices Net Taxes Real GDP Historical avg Rainfall volume of the previous season (RHS) Source: DoS and World Bank staff calculations. Source: DoS, Ministry of Water and Irrigation and World Bank staff calculations. While business travel and tourist arrivals FIGURE 3 • Tourist Arrivals Showing Signs of thrived in Jordan during the first nine months of Recovery after Reaching a Trough in March 2024 2023, the conflict in the Middle East caused a (percent) sharp drop in tourism, particularly single-day visits, before recovering in June 2024. Similar to other 30 20 countries in the region, travel for all purposes and 10 across nationalities continued to expand in 9M-2023, 0 with total arrivals reaching 5,058,744, surpassing pre- –10 COVID levels and peak levels in Q3-2022. However, a –20 steep decline was witnessed in November 2023, most –30 –40 notably for non-Arab travelers following the eruption –50 of the conflict (both the numbers overnight and single Jul-23 Aug-23 Sep-23 Oct-23 Nov-23 Dec-23 Jan-24 Feb-24 Mar-24 Apr-24 May-24 Jun-24 day tourists have contracted). The number of single- day tourists, who are often part of packaged tours that Overnight Same Day also include stops in Israel, dropped by 27.8 percent Source: Ministry of Tourism & Antiquities and World Bank staff calculations. between October 2023 and March 2024, compared to the same period in the previous years (Figure 3). In contrast, the number of overnight tourists fell by a relatively modest 3.9 percent during the same period, 34.1 percent in Q4-2023, driven mainly by higher as it is less sensitive to the first-round effect from the female participation at 15.1 percent in Q4-2023. conflict compared to single-day tourists. Since the Meanwhile, unemployment declined slightly to trough in March 2024, both overnight and single-day 21.4 percent in Q4-2023, yet it remained above the arrivals have been recovering on an annual basis, reg- pre-COVID average. istering the first increase in June 2024, with overnight Despite favorable growth outcomes arrivals up by 1.8 percent and single-day arrivals by 0.4 during 2023, low female participation and high percent. unemployment among the young and highly edu- Labor market outcomes slightly improved cated continue to weigh on overall labor market in Q4-2023 following three consecutive quarters outcomes. Notwithstanding the improvement in of decline. Labor force participation improved to Q4-2023, overall labor force participation continued 2 JORDAN ECONOMIC MONITOR – STRENGTH AMIDST STRAIN: JORDAN’S ECONOMIC RESILIENCE to deteriorate to 33.2 percent in 2023, down from labor productivity continue to suppress households’ its peak of 39.2 percent in 2017, significantly below real income growth. the global and regional averages. Women labor The refugee population in Jordan is force participation rate stood at only 14.0 percent particularly vulnerable to the economic slow- and the overall participation rate among holders of down, and also faces the effect of cutbacks in bachelor’s degree and higher levels of education has humanitarian assistance. According to the 2024 been trending downwards since 2017. The overall Vulnerability Assessment Framework (UNHCR with employment rate improved slightly to 25.9 percent in WBG inputs), 67.0 percent of registered refugees live 2023, yet it remains below pre-pandemic levels. The under the poverty line in 2023, up from 57.0 percent unemployment rate has improved to 22.0 percent in in 2021.4 Poverty rates among this population have 2023, with slight declines for both men and women, likely increased in the past two years due to cut-backs in particularly youth. However, unemployment level in humanitarian assistance and the increased cost remains disproportionately high among women of utilities. (relative to men) and young3 (relative to older age groups), at 30.7 percent and 46.0 percent in 2023, respectively. Addressing low participation rates and 2.  Public Finance Developments high unemployment, especially among these groups, would help unlock Jordan’s economic potential. Fiscal consolidation resumed in 2023 due While both unemployment and participa- to lower current expenditure, but slowed tion rates remained unchanged in Q1-2024, down in 5M-2024, with domestic revenue female unemployment rose in association with growth decelerating, affected by the higher female participation. The unemployment conflict in the Middle East rate recorded 21.4 percent in Q1-2024, unchanged from the previous quarter. This was driven by lower Fiscal consolidation continued in 2023 supported male unemployment, which offset the increase in by lower public expenditure. The overall deficit of female unemployment in Q1-2024. Male unem- the Central Government (CG) narrowed to 5.1 percent ployment rate continued to decline for the third in 2023, compared to 5.6 percent in 2022 (Figure 4). consecutive quarter to record 17.4 percent in The improvement has been supported by a decline Q1-2024, which is the lowest rate since Q3-2019. On in the total expenditure by 1.0 percentage points the other hand, female unemployment rose by 4.9 p.p. of GDP, which more than offset a 0.2 percentage to 34.7 percent in Q1-2024, which is the highest rate points of GDP decline in revenues in 2023, relative since 2017. Higher female unemployment rate was to the previous year. The primary deficit (excluding associated with an increase in female participation grants) also narrowed to 2.4 percent of GDP in 2023, for the second consecutive quarter to 15.5 percent compared to 3.8 percent in the previous year. in Q1-2024, which is the highest level since Q3 2018. Total revenues (as a percent of GDP) Meanwhile male participation declined marginally by declined in 2023, driven by lower sales tax rev- 0.1 percent to 53.7 percent in Q1 2024, relative to the enue and foreign grants, despite the increase in previous quarter. income tax revenue and non-tax revenue. Total The projected slowdown in economic revenues (including grants) recorded 25.3 percent growth, combined with the continued lack of of GDP in 2023, down from 25.7 percent of GDP in opportunities in the formal labor market will 2022 (Figure 5). Tax revenues declined marginally to particularly affect those relying on informal 17.1 percent of GDP in 2023, relative to 17.5 percent employment who have little job security. The latest poverty rates available date back to 2018 (15.7 per- 3 Between ages 15–24. cent in July 2018). Limited private sector job creation, 4 Available at: https://data.unhcr.org/en/documents/ segmented labor markets, high informality, and low details/109075. Recent Economic Developments 3 FIGURE 4 • CG Fiscal Deficit Widened on Annual FIGURE 5 • Despite Higher Grants, Revenues in Basis in 5M-2024 5M-2024 Were Affected by Lower (percent of GDP) Income and Profit Tax Revenue (percent of GDP) 40 30 30 20 20 10 0 10 –1.3 –1.7 –10 2018 2019 2020 2021 2022 2023 5M-2023 5M-2024 0 2018 2019 2020 2021 2022 2023 5M-2023 5M-2024 Total revenues and grants Total expenditures (incl. use of cash) Indirect tax revenue Direct tax revenue Overall balance Non tax revenues Grants Source: MoF and WB staff calculations. Source: MoF and WB staff calculations. of GDP in 2022. This was mainly driven by a 0.8 per- FIGURE 6 • The Annual Increase in Expenditure centage points decline in sales tax revenue, affected in 5M-2024 Was Mainly Driven by Higher Interest Payments mainly by the decline in the value of imports pre- and (change in expenditure, in percent post- October 2023, which more than offset the of GDP) 0.4 percentage points of GDP improvement in income 3 and profit tax revenue. Non-tax revenue increased by 2 0.2 percentage points of GDP to record 6.2 percent 1 of GDP, mainly driven by higher property income. 0 Meanwhile, foreign grants declined to 2.0 percent of –1 –2 GDP, relative to 2.3 percent of GDP in 2022. –3 Total expenditure declined, supported by 2019 2020 2021 2022 2023 5M-2023 5M-2024 the phasing out of fuel subsidies, despite higher interest payments and capital expenditure. Total Compensation of employees Purchases of Goods & Services expenditure shrank by 1.0 p.p. of GDP to 30.4 percent Interest payments Defense and Security of GDP in 2023. This was driven by lower current Goods Subsidies Transfers expenditure, despite higher capital expenditure. Capital expenditure Total expenditures Current expenditure recorded 26.6 percent in 2023, Source: MoF and WB staff calculations. down from 28.0 percent in 2022. This was mainly driven by the phasing out of fuel subsidies that were introduced in 2022 following the Russian invasion of Debt accumulation continued to slow Ukraine, which more than offset the increase in interest down, mainly supported by improved budget payments affected by monetary policy tightening sector fiscal performance, but remains elevated both domestically and globally. Capital expenditure as pressures from the wider public sector per- increased by 0.4 p.p. to 3.8 percent of GDP in 2023, sist. The general government unconsolidated debt reflecting better execution at 86.5 percent of the increased by 2.6 p.p. of GDP to 113.8 percent of budgeted amount compared to 75.2 percent in 2022 GDP in 2023, compared to the previous year. The when fiscal space was constrained due to the implica- increase was mainly attributed to higher foreign tions of the Russian invasion of Ukraine (Figure 6). currency debt, which rose by 2.8 p.p. of GDP to 4 JORDAN ECONOMIC MONITOR – STRENGTH AMIDST STRAIN: JORDAN’S ECONOMIC RESILIENCE FIGURE 7 • Debt Increased in 2023, Mainly FIGURE 8 • SSIF Holdings of Debt Increased, Driven by Higher Foreign which Helped Tame the Increase in Currency debt the Consolidated Debt Ratio in 2023 (percent of GDP) (percent of GDP/percent of newly issued debt) 120 30 80 100 25 60 80 20 60 15 40 10 40 20 5 20 0 0 2017 2018 2019 2020 2021 2022 2023 0 2019 2020 2021 2022 2023 Debt holding by SSIF (% of GDP) Excluding SSIF holdings Including SSIF holdings Debt purchased b y SSIF (% of newly issued debt) (RHS) Source: MoF and World Bank staff calculations. Source: MoF and WB staff calculations. 51.7 percent of GDP, including the issuance of 5M-2024, compared to an increase of 11.4 percent USD1.25 billion (JD 0.9 billion) Eurobonds in April in 5M-2023. The annual increase in foreign grants, 2023.5 Most (68 percent) of the increase in general non-tax revenue, and sales tax revenue was partly government unconsolidated debt was driven by the offset by the first annual decline in income and profit budget sector financing needs, followed by NEPCO tax revenues since 2020. The deceleration in total (15.2 percent) and WAJ and water distribution revenue growth 5M-2024 coincided with the introduc- companies (10.1 percent). The general government tion of relief measures aimed at containing the impact consolidated debt (i.e., after netting out the SSIF of trade disruptions in the Red Sea, as well as with a holdings of government debt) also rose by 0.7 p.p. slowdown in economic activity growth in Q1-2024. In of GDP to 89.2 percent of GDP in 2023, compared January 2024, the GoJ introduced a temporary exemp- to the previous year (Figure 7). The SSIF holdings tion (until end of June) on customs duties and sales of government debt continued to increase to reach taxes on sea shipping costs to help contain the impact 24.6 percent of GDP in 2023 (up from 22.6 percent of high shipping costs attributed to trade disruptions in the previous year) as the SSIF accelerated the in the Red Sea.7 On the other hand, total expenditure pace at which it absorbs newly issued government debt to around 40 percent (Figure 8), which helped 5 The GoJ issued a 6-year Eurobonds at 7.5 percent. The tame the increase in the consolidated debt ratio USD 1.25 billion is nearly double the amount it initially in 2023. intended to issue ($750 million). CG overall fiscal deficit widened on annual 6 Adjusted with ‘refund and clearing’ data of JD 88 million basis in 5M-2024, mainly due to higher interest for 2023 and JD 36 million for the first five months of payments and lower income and profit tax rev- 2024. Source: MoF Monthly bulletin, available at: https:// enues. Central Government overall deficit widened www.mof.gov.jo/ebv4.0/root_storage/ar/eb_list_page/ may20241.pdf. by 34.5 percent to JD655.2 million in 5M-2024 as the 7 Available at: https://www.aci.org.jo/News/key_circulars​ increase in expenditure outpaced that of the revenues, /75636.aspx. Available at: https://jordantimes.com/ne​ relative to the same period in 2023. Total revenue ws/local/government-extends-relief-measures-tackle-ma​ and grants6 rose by 2.9 percent on annual basis in ritime-crisis-price-hikes. Recent Economic Developments 5 rose by 6.5 percent on annual basis in 5M-2024, rela- FIGURE 9 • Current Account Deficit Widened in tive an increase of 8.0 percent in 5M-2023. The annual Q1-2024, after Narrowing in 2023 to the Lowest Level since 2019 increase in expenditure in 5M-2024 was mainly due to (percent of GDP) higher interest payments, while the increase in other 30 categories was broadly contained. Accordingly, the 20 primary surplus (excluding foreign grants), which is 10 an indication of the fiscal consolidation momentum, 0 decline by 5.6 percent on annual basis to JD231.1 mil- –10 lion in 5M 2024. Meanwhile, both consolidated and –20 unconsolidated GG debt increased by 3.2 percent –30 and 2.3 percent, respectively since December 2023, 2018 2019 2020 2021 2022 2023 Q1-2023 Q1-2024 registering JD42.5 billion and JD33.0 billion, respec- tively, in May 2024, driven mainly by higher domestic Trade Balance Income Account currency debt. Current Transfers Services Balance CAB Source: CBJ and World Bank staff calculations. 3.  External Sector Developments Affected by the conflict, the current This resulted in a narrowing of the trade deficit to account deficit widened in Q1-2024, after 20.2 percent of GDP, down from 23.7 percent the improving substantially in 2023 due to previous year. The decline in imports in 9M-2023 lower trade deficit and increased tourism (pre-October 2023) was mainly a price effect, while receipts. the decline in Q4-2023, following the eruption of the conflict, was primarily a volume effect that can The current account deficit (CAD) more than be attributed to trade disruptions in the Red Sea halved in 2023 (to 3.7 percent of GDP from associated with the conflict since the majority of 7.8 percent in 2022). The improvement in the Jordanian imports come from non-Arab Asian current account was supported by a lower trade countries (Figure 10). International oil, wheat, and deficit and a higher services surplus (Figure 9). maize prices declined by around 17.2 percent, 20.8 The services account benefited from a 27.4 percent percent, and 20.7 percent, respectively, in 2023, increase in travel receipts which reached 14.5 percent compared to their levels in 2022. Meanwhile, the of GDP in 2023, compared to 11.9 percent of GDP in decline in exports was mainly due to lower domestic 2022. Overall, the service account balance reached exports in 2023,8 driven by a decrease in Potassium 7.0 percent of GDP in 2023, compared to 4.7 percent and Phosphate exports relative to the previous year. in the 2022. On the other hand, slight improvements in The performance of key exports in 2023 (pre- and net investment income supported the primary income post-October) had mixed impacts from prices and account deficit to narrow by 0.1 percentage points volumes. The decline in potassium exports was of GDP in 2023, while public grants and workers’ mainly due to lower international prices in 9M-2023 remittances declined, reducing the current transfers (before October 2023) and in Q4-2023. In contrast, surplus by 1.9 percentage points of GDP in 2023, the decline in phosphate exports was primarily due relative to the previous year. to reduced volumes before in 9M-2023 (before The trade deficit narrowed in 2023 as imports contraction outpaced the contraction in exports. Exports dropped by 1.5 p.p. of GDP 8 Domestic exports amounted to 92.5 percent of total to 24.7 percent in 2023, while imports declined by export in 2023, whereas re-exports amounted for 5.0 p.p. of GDP to 44.9 percent of GDP in 2023. 7.5 percent of total exports. 6 JORDAN ECONOMIC MONITOR – STRENGTH AMIDST STRAIN: JORDAN’S ECONOMIC RESILIENCE FIGURE 10 • Import Declines Prior to Oct 2023 travel receipts and higher trade deficit. The trade Stemmed Mainly from Lower Prices, deficit widened by 8.3 percent on annual basis in while the Later Decline Resulted Q1-2024 as the decline in exports exceeded that of Mainly from Lower Volumes (annual growth rate) the imports. The value of imports declined by 2.7 per- cent on annual basis in Q1-2024, primarily due to a 6 decrease in non-energy imports, such as iron and –4 –14 steel. On the other hand, energy imports increased –24 by 1.5 percent on annual basis in Q1-2024, despite –34 an annual increase of 2.1 percent in international oil –44 prices, implying lower imported volumes. Meanwhile, –54 the value of exports also declined by 11.6 percent on –64 an annual basis in Q1-2024, primarily due to lower Value Price Volume Value Price Volume Value Price Volume exports of fertilizers and potassium as international Pre-Oct (3Qs 2023) Post-Oct (Q4 2023) Total (2023) prices declined, despite a 2.2 percent increase in Cereals Petroleum Crude textile exports. PortWatch data indicates that import Gas Oil, Disel Oil (Solar) Petroleum Spirit (Benzene) and export volumes through Al-Aqaba port declined significantly between January and May 2024,10 Source: DOS and World Bank staff calculations. notwithstanding one-off recovery in March and May 2024 (Figure 12 and Figure 13). Meanwhile, travel October 2023) and lower prices in Q4-2023, com- receipts decline by 5.2 percent in Q1-2024, despite pared to the previous year (Figure 11). Meanwhile, a 9.7 percent annual dropped in arrivals during the international prices of Potassium chloride declined same period (see Box 1). by around 55.6 percent in 2023, while the prices of Higher portfolio investments offset the Phosphate rock increased by around 20.9 relative to decline in FDI and other investments, supporting the previous year.9 a larger capital and financial account surplus, The current account deficit widened by which, along with the strong CAD improvement USD310.2 million on annual basis to USD1.1 led to higher foreign reserves. The capital and billion (around 2.0 percent of the full year financial account sustained a sizeable surplus of 5.5 estimated GDP) in Q1-2024, mainly due to lower percent of GDP in 2023, compared to 4.5 percent in 2022. Portfolio investment witnessed a significant improvement from a net outflow of 1.4 percent of FIGURE 11 • Domestic Exports Decline in 2023 Was Mainly Driven by Lower GDP in 2022 to a net inflow of 2.4 percent, owing Potassium and Phosphate Exports to a sizeable Eurobond issuance of USD1.25 billion (annual growth rate) in April 2023. FDI returned to levels close to those 60 prevailed in 2019–21 at 1.5 percent of GDP in 2023, 40 after doubling in 2022 to 2.6 percent of GDP, a rise 20 0 –20 9 World Bank Commodities Price Data (The Pink Sheet). –40 Available at: https://www.worldbank.org/en/research/ –60 commodity-markets. Value Price Volume Value Price Volume Value Price Volume 10 In response to the Red Sea disruptions, the GoJ announced that a new land and sea transportation route Pre-Oct (3Qs 2023) Post-Oct (Q4 2023) Total (2023) linking Aqaba with Egyptian ports on the Mediterranean Potassium Phosphates Sea has been activated as an alternative to the Red Sea route. Available at: https://en.royanews.tv/ Source: DOS and World Bank staff calculations. news/47763/2023-12-23. Recent Economic Developments 7 FIGURE 12 • Export Volumes through Al-Aqaba Port Declined Significantly between January and May 2024 (in ‘000 Metric Tons) Time Series Historical Seasonal Pattern 600 600 500 500 400 400 300 300 200 200 100 100 0 0 2019m1 2020m1 2021m1 2022m1 2023m1 2024m1 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Export Volume, in ’000 Metric Tons Monthly range (2019–2023) Polynomial Smoothing 2024 Source: PortWatcch and World Bank staff calculations. FIGURE 13 • Import Volumes through Al-Aqaba Port Declined Significantly between January and May 2024 (in ‘000 Metric Tons) Time Series Historical Seasonal Pattern 1000 1000 800 800 600 600 400 400 200 200 0 0 2019m1 2020m1 2021m1 2022m1 2023m1 2024m1 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Import Volume, in ’000 Metric Tons Monthly range (2019–2023) Polynomial Smoothing 2024 Source: PortWatcch and World Bank staff calculations. driven mainly by high retained earnings in the first 4.  Monetary Policy and Inflation half of the year. Meanwhile other investments halved to 1.6 percent of GDP in 2023, from 3.2 percent Monetary policy tightening supported of GDP in 2022. Error and omissions recorded the containment of inflation and money an outflow of around 1.0 percent of GDP in 2023, supply growth. relative to an inflow of around 1.8 percent of GDP in the previous year. The lower CAD and the higher Despite accelerating since September 2023, financial account surplus in 2023 supported an annual headline inflation remains contained. The increase in CBJ’s gross usable reserves by USD0.9 annual headline inflation rate recorded 1.8 percent billion to USD17.3 billion. At this level, the reserves in June 2024, up from 0.9 percent in August 2023 remain adequate, covering 7.0 months of next year’s (Figure 14). The acceleration has been supported by imports of GNFS. monthly inflation dynamics offsetting a small favorable 8 JORDAN ECONOMIC MONITOR – STRENGTH AMIDST STRAIN: JORDAN’S ECONOMIC RESILIENCE TOURISM DYNAMICS: SHIFTS IN ARRIVALS AND RECEIPTS BOX 1.  Despite a decline in tourist arrivals following heightened regional tensions after October 7, the reduction in travel receipts remained limited. This was supported by higher spending from tourists from the Gulf Cooperation Council (GCC) and other Arab countries, whose arrivals increased on an annual basis. Total tourist arrivals fell by 7.5 percent between October 2023 and June 2024, largely driven by a decrease in single-day visitors, often part of packaged tours that also include stops in Israel. During this period, single-day tourists declined by 23.5 percent, while overnight tourists decreased by 4.1 percent compared to the same period in previous years. March 2024 saw the sharpest annual decline, partly due to the seasonal impact of fewer tourists during the holy month of Ramadan. A breakdown by nationality shows that the overall decline in tourist arrivals since October 2023 was primarily due to fewer European visitors, which more than offset the increase in tourists from the GCC (Figure B.1). Meanwhile, travel receipts declined by 2.8 percent between October 2023 and March 2024 compared to the same period in the previous year. The rise in the number of GCC and other Arab tourists between October 2023 and June 2024 supported higher spending, helping to mitigate the overall reduction in travel receipts by offsetting the lower spending by foreign tourists (Figure B.2). FIGURE B.1 • The Decline in Tourist Arrivals FIGURE B.2 • Higher Spending from GCC and since October 2023 Was Driven other Arab Tourists whose Arrivals by Fewer Europeans, which More Increased Helped Contain the than Offset the Increase in Tourists Decline in Total Travel Receipts from the GCC since October 2023 (annual growth rate/percentage (annual growth rate/percentage points) points) 20 25 20 10 15 10 0 5 0 –5 –10 –10 –15 –20 –20 –25 –30 –30 Aug-23 Sep-23 Oct-23 Nov-23 Dec-23 Jan-24 Feb-24 Mar-24 Apr-24 May-24 Oct 23–May 24 Aug-23 Sep-23 Oct-23 Nov-23 Dec-23 Jan-24 Feb-24 Mar-24 Oct 23–Mar 24 Jordanias Residing Abroad GCC Other Arabs Foreigners Other Arabs Europe US Non-Arab Asia GCC Jordanias Residing Abroad Others Total Total Source: Ministry of Tourism & Antiquities and WB staff calculations. Source: Ministry of Tourism & Antiquities and WB staff calculations. base effect (Figure 15). The monthly inflation pace (i.e., effective policy rate) to reach 7.25 percent. The between September 2023 and April 2024 remains muted weighted average lending and savings interest rates at an average of 0.2 percent, mainly driven by positive in the banking sector have remained at the highest contributions from food items (mainly meat and poultry), levels in years. Real interest rates11 have broadly fuel and transportation prices, and rents (Figure 16). stabilized and remained elevated supported by high Real interest rates remain positive and nominal interest rates (Figure 17). high, supporting further containment of inflation. The CBJ has kept its policy rate unchanged since 11 Nominal interest rates adjusted for inflation using a July 2023, after raising it by a total of 525 basis points 3-month average of annual headline inflation with equal since the beginning of this tightening cycle in March weights (50–50) assigned to backward- and forward- 2022, leading the overnight deposit window rate looking components. Recent Economic Developments 9 FIGURE 14 • After Significant Deceleration in FIGURE 16 • Monthly Inflation Since September 8M-2023, Annual Headline Inflation 2023 Was Supported by Positive Rate Accelerated Slightly since Contribution from Food and Fuel September 2023 Items (percent) (change in monthly headline inflation rate, ppts) 8 5 6 4 4 3 2 2 1 0 0 –2 –1 May-20 Aug-21 Dec-19 Mar-21 Sep-18 Sep-23 Nov-17 Nov-22 Feb-19 Feb-24 Jun-17 Jun-22 Jan-22 Apr-18 Apr-23 Oct-20 Jul-19 Mar 22–Sep 22 Oct 22–Aug 23 Sep 23–Jun 24 Food Inflation Rents Headline Inflation Historical average (2011–2024) Core items, excl. rents Fuel & Transportation Inflation Core inflation Core inflation excl. rents Headline monthly Inflation Source: DoS and WB staff calculations. Source: DoS and WB staff calculations. FIGURE 15 • The Acceleration Since September FIGURE 17 • Real Interest Rates Stabilized after 2023 Has Been Supported by Reaching a Peak in October 2023 Monthly Dynamics, which Remains (percent) Broadly Muted (change in annual headline 10 inflation rate, percentage points) 5 5 3 1 0 –1 –3 –5 Aug-22 Aug-23 Aug-19 Aug-20 Aug-21 Aug-17 Aug-18 Dec-22 Dec-23 Dec-21 Dec-19 Dec-20 Dec-17 Dec-18 Apr-23 Apr-24 Apr-22 Apr-19 Apr-20 Apr-21 Apr-17 Apr-18 –5 Mar 22–Sep 22 Oct 22–Aug 23 Sep 23–Jun 24 Base effect, in p.p. Monthly dynamics, in p.p. Interbank rate Overdrafts Change in annual headline inflation rate, in p.p. Loans and Advances Time Deposit Rate Source: DoS and WB staff calculations. Source: CBJ, Haver analytics and WB staff calculations. The real effective exchange rate appreci- relatively lower inflation rate compared to its major ated on annual terms in April and May 2024 trading partners (Figure 18). after depreciating for eleven consecutive months Money supply growth remains low, despite between May 2023 and February 2024. The real a slight acceleration recently, supported by appreciation, which reflects competitiveness losses, monetary policy tightening and the ongoing was mainly driven by the nominal appreciation of the fiscal consolidation. Broad money (M2) annual US dollar against its main trading partners, which growth rate recorded 2.8 percent in April 2024, more than offset the favorable impact from Jordan’s down from its peak of 7.7 percent in June 2022 10 JORDAN ECONOMIC MONITOR – STRENGTH AMIDST STRAIN: JORDAN’S ECONOMIC RESILIENCE FIGURE 18 • The REER Appreciated on Annual FIGURE 20 • Improved NFA Contribution to Broad Terms in April and May 2024 Money Annual Growth Rate (contribution to annual change, p.p.) (percentage points) 20 7 15 5 10 3 5 –1 0 –5 –1 –10 –3 Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 Apr-21 Jun-21 Aug-21 Oct-21 Dec-21 Feb-22 Apr-22 Jun-22 Aug-22 Oct-22 Dec-22 Feb-23 Apr-23 Jun-23 Aug-23 Oct-23 Dec-23 Feb-24 Apr-24 –5 Aug-19 Dec-19 Apr-20 Aug-20 Dec-20 Apr-21 Aug-21 Dec-21 Apr-22 Aug-22 Dec-22 Apr-23 Aug-23 Dec-23 Apr-24 JD NEER (in p.p.) Inflation differential (in p.p.) JD REER (YoY, in %, + ve = appreciation) NFA, Banks NFA, central Bank NFA Source: Brugel and WB staff calculations. Source: CBJ and WB staff calculations. FIGURE 19 • Broad Money Annual Growth Rate (Figure 19). The contribution from the net domestic Remains Low, with Only a Modest assets declined significantly given the slowdown in Uptick Observed Recently lending to the private and public sectors, in addition (percent/percentage points) to a decline in other unclassified assets. On the other 15 hand, the contribution of the net foreign assets has been improving gradually between March 2023 and 10 March 2024, reflecting the improvement of Jordan’s external balances, except for a temporary decline in 5 November 2023 (Figure 20). 0 –5 Aug-19 Dec-19 Apr-20 Aug-20 Dec-20 Apr-21 Aug-21 Dec-21 Apr-22 Aug-22 Dec-22 Apr-23 Aug-23 Dec-23 Apr-24 NFA NDA Series 3 Source: CBJ and WB staff calculations. Recent Economic Developments 11 2 OUTLOOK AND RISKS E conomic growth is expected to temporarily costs due to the Red Sea disruptions. Annual head- slowdown in 2024, affected by the conflict line inflation is projected to record 2.0 percent in in the Middle East, which, in our baseline 2024, and 2.1 percent in 2025, before converging to scenario, is not anticipated to be extended or its long-term average (2011–2023) of 2.4 percent in escalate further.12 Real GDP annual growth rate the subsequent years. decelerated for the second consecutive quarter to Fiscal consolidation is projected to con- 2.0 percent in Q1-2024 as the conflict in the Middle tinue, albeit at a tepid pace. Revenue-enhancing East affected the growth of sectors with backward and measures, along with the expected easing of forward linkages to tourism: notably wholesale and monetary policy are expected to support domestic retail trade, transport, and construction. Also, trade revenues. Meanwhile, the primary fiscal deficit is disruptions had some negative effects on industrial projected to continue narrowing to 0.1 percent of sector growth, along with a normalization of growth in GDP in 2024, turning into a small surplus in 2025 as agriculture is expected later in 2024, following growth primary expenditure remain contained. However, the acceleration in 2023. As the data shows a limited overall fiscal deficit is projected to increase slightly impact of the regional conflict, with some signs of to 5.3 percent of GDP in 2024 due to higher interest recovery in tourist arrivals seen in June 2024, the full- payments, before resuming its gradual narrowing in year real GDP growth is projected to slow slightly to subsequent years in part due to lower interest rates. 2.4 percent in 2024, with a recovery to 2.6 percent Nevertheless, continued fiscal pressures from the projected thereafter. water and electricity sectors are expected to keep Inflation is anticipated to remain contained in 2024, supported by lagged effect of mon- 12 The baseline assumes that the ongoing conflict will etary policy tightening and relatively stable prices gradually decline in intensity and eventually fade by Q4 for imported commodities, mainly wheat and maize, 2024, while the alternative scenario assumes a higher despite some transitory impact from higher shipping intensity irrespective of the duration. 13 the unconsolidated general government debt level external conditions cast a shadow over an oth- elevated in the short- to medium-term, while the erwise optimistic outlook. The ongoing conflict in consolidated general government debt is projected to the Middle East has already impacted Jordan’s decrease. economy, notably through the tourism sector, which Jordan’s current account deficit is experienced a decrease in total tourist arrivals. projected to widen in 2024 before narrowing However, travel receipts remained resilient so far, gradually thereafter. The projected widening of mainly due to higher spending from GCC tourists Jordan’s CAD in 2024 is driven by lower services whose arrivals increased in Q1-2024, relative to surplus and a slightly higher trade deficit, relative the same period last year. A continued conflict to the previous year. Low exports growth, affected risks affecting tourists‘ perception of Jordan as a mainly by a significant decline in international phos- safe destination, adversely impacting the tourism phate prices13 and the downward revision of key sector, which has been vital for its current account trading partners’ growth in 2024 will be countered recovery since 2021. Wider disruptions coming by a gradual import recovery under our baseline from across the border would exacerbate risks to scenario. Meanwhile, lower services surplus is Jordan’s economy, with potential further disrup- mainly attributed to lower travel receipts given the tions in trade, volatility in tourism, and fluctuations spillover from the ongoing conflict. Beyond 2024, in energy prices that could affect consumption and further containment of imports value, supported by production costs. A prolonged conflict in the Middle the expected decline in international prices of key East could pose an upside risk to both the inflation imported commodities,14 and strong travel receipts and fiscal outlooks, while a significant reduction in from the recovery of foreign tourist arrivals are pro- travel receipts would also impact Jordan’s current jected to support a continued reduction in the CAD. account deficit (see Box 2). The external sector outlook remains sensitive to the duration and extent of the conflict. 13 World Bank. 2024. Commodity Markets Outlook, April Uncertainties around the ongoing 2024. conflict in the Middle East poses heightened 14 World Bank. 2024. Commodity Markets Outlook, April risks to Jordan’s economy. The challenging 2024. BOX 2. AN ALTERNATIVE SCENARIO: THE ECONOMIC IMPACT OF ESCALATING REGIONAL CONFLICT An escalation of regional conflict poses risks to Jordan’s economic outlook. So far, the impact on overall and sectoral growth rates has been relatively limited, even compared with previous external shocks (Figure B.4), with the most pronounced effects observed in the tourism sector. This box explores an alternative scenario that looks at how an escalation in regional conflict could leads to further deterioration in travel receipts and the current account balance— the primary channel through which the conflict has been affecting economy. The analysis of this box explores more pronounced impact of the conflict on travel receipts and on trade. A sustained reduction of travel receipts will weigh on the recent improvements in the current account. The narrowing of the CAD in 2023 was largely supported by the 27.4 percent increase in travel receipts. Under an alternative scenario where travel receipts decrease by 15 percent in Q3 2024, which is normally the peak season, the CAD could deteriorate in 2024 to 6.3 percent of GDP, compared to the baseline of 4.8 percent. Under a larger travel receipts shock, where travel receipts are 30 percent lower, the current account would register 7.4 percent deficit (Figure B.4). In addition to travel receipts, the outpacing of import to export contraction has narrowed the CAD in 2023. Therefore, the impact of the Conflict on the external sector will also hinge on the magnitude of which trade disruptions will affect imports and export volumes. In May 2024, import volumes through Al-Aqaba port reached a historical low level, whereas exports declined significantly (See Section 3: External Sector Development). Other risks remain, although contained thus far, could have significant implications on Jordan’s economy. The linkages of Jordan’s tourism industry with various other areas, including airlines, travel services, and hospitality, imply that the bigger downturn in tourism could have a cascading effect on the growth rates of several sectors including wholesale and retail trade, and construction. Continuous trade disruptions (continued on next page) 14 JORDAN ECONOMIC MONITOR – STRENGTH AMIDST STRAIN: JORDAN’S ECONOMIC RESILIENCE (continued) BOX 2. AN ALTERNATIVE SCENARIO: THE ECONOMIC IMPACT OF ESCALATING REGIONAL CONFLICT could drag down the growth rate of the industrial sector. Higher than projected international oil prices poses upside risks to inflation and fiscal deficit, and weigh further on the external sector outlook. The potential for reduced domestic consumption through behavioral changes could be substantial on the real GDP, given the large share of domestic consumption of in GDP.a Disruptions to natural gas and water supply could also deteriorate economic outcomes. FIGURE B.3 • Compared to Previous Shocks, the Overall and Sectoral Annual Growth Rates in Q4- 2023 Shows a Relatively Limited Impact from the Current Conflict so Far* (in percent, year on year) Restaurant and hotels (Share of GDP in 2023=1.4) Trade (wholesale & retail) (Share of GDP in 2023=8.6) 2 6 0 4 –2 –4 2 –6 0 –8 –10 –2 –12 –4 –14 –16 –6 Q1-2011 Q2-2020 Q4-2023 Q1-2011 Q2-2020 Q4-2023 Transport & Comm. (Share of GDP in 2023=8.7) Manufacturing (Share of GDP in 2023=18.0) 5 4 3 0 2 –5 1 0 –10 –1 –2 –15 –3 –20 –4 Q1-2011 Q2-2020 Q4-2023 Q1-2011 Q2-2020 Q4-2023 Construction (Share of GDP in 2023=2.9) Overall GDP 5 4 0 3 2 –5 1 –10 0 –15 –1 –2 –20 –3 –25 –4 Q1-2011 Q2-2020 Q4-2023 Q1-2011 Q2-2020 Q4-2023 Source: DoS and World Bank staff calculations. * Q1-2011: After the Arab spring uprising, Q2-2020: Following the COVID-19 Pandemic spread. a According to DoS, private consumption expenditures capture 76.2 percent of GDP over the period 2008–2019. (continued on next page) Outlook and Risks 15 (continued) AN ALTERNATIVE SCENARIO: THE IMPACT OF FURTHER ESCALATION (continued) BOX 2.  FIGURE B.4 • Potential Impact of Lower Travel Receipts on CAD (percent of GDP) 0 –3 –4.8 –6 –6.3 –7.4 –9 2019 2020 2021 2022 2023 2024 2025 2026 CA balance (15% drop in travel recipets in Q3 2024) CA balance (30% drop in travel recipets in Q3 2024) CA balance (baseline) Source: WB staff projections. 16 JORDAN ECONOMIC MONITOR – STRENGTH AMIDST STRAIN: JORDAN’S ECONOMIC RESILIENCE TABLE 1 • Jordan Selected Economic and Fiscal Indicators 2021–26 2021 2022 2023 2024 2025 2026 Act. Act. Act. Proj. Proj. Proj. Real sector (Percent, unless otherwise specified) Real GDP growth 3.7 2.6 2.7 2.4 2.6 2.6 Nominal GDP (JD Billion) 32.9 34.6 36.2 37.8 39.6 41.5 CPI Inflation (p.a.) 1.4 4.2 2.1 2.0 2.1 2.4 Government finance (Percent of GDP, unless otherwise specified) Total revenues and grants 24.7 25.7 25.3 25.9 26.2 26.5 Domestic Revenue 22.3 23.5 23.3 24.0 24.5 24.8 Tax revenues 17.1 17.5 17.1 17.8 18.2 18.4 Non-tax revenues 5.2 6.0 6.2 6.2 6.2 6.5 Foreign Grants 2.4 2.3 2.0 1.9 1.8 1.7 Total expenditure (incl. use of cash) 30.9 31.4 30.4 31.2 31.2 31.1 Current expenditure 27.0 28.0 26.6 27.4 27.3 27.1 Wages and salaries 5.4 5.3 5.4 5.5 5.4 5.3 Interest payments 4.3 4.1 4.7 5.4 5.5 5.6 Military and public security expenditure 8.4 8.2 8.3 8.3 8.2 8.1 Subsidies (including fuel and wheat) 0.2 2.3 0.4 0.4 0.4 0.4 Transfers 7.0 6.8 6.6 6.7 6.7 6.7 Purchases of goods & services 1.8 1.2 1.2 1.2 1.1 1.0 Capital expenditure 3.5 3.4 3.8 3.8 3.9 4.0 CG Overall balance (deficit (–), incl. grants) –6.2 –5.6 –5.1 –5.3 –5.0 –4.6 CG Primary Balance (deficit (–), incl. grants) –1.9 –1.5 –0.4 –0.1 0.4 0.9 (Percent of GDP, unless otherwise specified) Unconsolidated GG debt a 108.8 111.2 113.8 113.9 114.9 115.1 Consolidated GG debtb 87.5 88.6 89.2 89.1 88.5 87.1 SSIF holdings of government debt 21.3 22.6 24.6 24.8 26.5 28.0 External sector (Percent of GDP, unless otherwise specified) Current Account –8.0 –7.8 –3.7 –4.8 –4.6 –4.3 Foreign direct investments, net 1.3 2.6 1.5 1.4 1.6 1.9 Memorandum Items: NEPCO operating balance (JD million)c –133 –249 –411 –497 –524 –511 WAJ overall balance (JD million) –230.4 –182.6 –264.2 –225.0 –215.0 –203.0 Export FOB (% growth) 17.8 36.6 –1.5 1.0 2.7 3.5 Import FOB (% growth) 25.0 27.0 –6.0 2.7 3.2 3.1 Travel Receipts (% growth) 95.8 110.5 27.4 –0.7 9.8 4.9 Remittances (% growth) 1.0 1.5 1.4 1.8 2.0 2.2 Gross usable Foreign Currency Reserves (US$ million) 17,272 16,432 17,319 17,330 17,339 17,347 In months of next year’s imports of GNFS 6.9 6.8 7.0 6.7 6.5 6.3 Source: World Bank staff projections. a Including NEPCO and WAJ debt and securitization of domestic arrears in 2019 and 2020. b Netting out SSIF holdings c Based on information made available to the WB by the GoJ in June 2024. The WB did not verify the forecasted values. Outlook and Risks 17 1818 H Street, NW Washington, DC 20433