AMMAN — Global
factors, such as higher inflation rates, a steep rise in food and oil prices,
and the fallout of
Russia’s war in Ukraine, led Jordan’s trade deficit to rise
in the first quarter of the year, economists contend.
اضافة اعلان
“Global factors
drove our inflation rates up,” said one of the economists, Mufleh Al-Aqel.
“We’re not living
in a bubble,” he groaned.
Imports in the
first quarter of the year were affected by a steep rise in global freight
costs, insurance fees, and the government focusing on certain purchases such as
wheat. Official figures show that imports in the first quarter jumped by 28.6
percent to JD4.276 billion, compared with JD3.326 billion in the same period in
2021.
Inflation as
reflected in the general consumer price index climbed during the first third of
the year by 2.62 percent to 104.58 percent, compared with 101.91 percent in the
corresponding period in 2021, according to the
Jordan News Agency, Petra.
Aqel said that the
value of imports, which jumped up by nearly JD1 billion, are likely to increase
further in the next few weeks.
The rise in the
deficit indicated that there was an increase in the value of imports. “It is
something that happened everywhere in the world and Jordan was not in
isolation”, he said. He explained that one of the imported commodities was oil,
which reached $120 per barrel, up from an average of $50.
He asserted that
the greatest risk to the balance of trade was inflation and a rise in prices of
other commodities, stating that the continuity of the Russian-Ukrainian war may
“lead to an uncomfortable price situation”.
He insisted that
raising interest prices would not lead to price increases. “But it is not the
solution because the problem is actually related to external factors”, he
added.
Aqel and other
economists said solutions could lie in utilizing fiscal and monetary policies
to control price increases. Other recommendations include the implementation of
partnership programs signed with the UAE and Egypt, taking advantage of
manufacturing opportunities in the mining sector, the abolition or reduction of
sales tax on goods whose prices had risen, and the extension of the National
Aid Fund’s cash support umbrella to more families.
Another economist,
Mazen Irsheid, told
Jordan News that the increased deficit was expected. The
reasons were mainly due to the trade exchange, which tilted to imports
exceeding exports by nearly three folds.
Other reasons, he
noted, included the rise in energy and food prices. “This will have negative
repercussions on the deficit in trade exchange”, he said. “So the cost of
imports becomes greater than the value of exports, and as a result of the rise
in global oil prices and the rise in foodstuffs, the trade exchange deficit has
worsened”.
He asserted there
was “no radical solutions” because the price hike came suddenly, and “Jordan
does not have the financial resources to alleviate the deficit in trade
exchange or in the general budget, unless the state wants to take proactive
steps to mitigate the aggravation of the situation”.
He called on the
state to “depend on itself, its competencies, renewable energy sources, and the
establishment of huge projects that would meet the needs of the state and its
citizens”. This calls for a long-term plan that exceeds five years, he added.
Zayyan Al-Zawaneh
said Jordan suffers from a “chronic trade deficit due to the large import
bill”.
He said the global
economy, including Jordan’s, “entered a phase of slow and gradual recovery”
following the removal of restrictions under COVID-19. That, he explained,
resulted in increased imports as demand raised, pushing prices of commodities
up.
The Ukraine war is
another reason, he added. He said the conflict dramatically increased the
prices of oil, foodstuffs, and also that of basic inputs in the production
process, such as feed and fertilizers, Zawaneh added.
Mahmoud Al-Hailat,
an economics professor at
Yarmouk University, said that the rise in interest
rates was a reaction to the reduction of the monetary base. “Although it
contributes to curbing inflation, it raises borrowing costs and increases
installments on the debtor, thus contributing to the erosion of available
income”, he said.
Additionally, he
pointed out, with the rise in prices people’s purchasing power is weakened.
“The blow will double, especially for people with limited income”.
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