AMMAN — The
World Bank said in the Middle East Economic Outlook issued on April 14 that the
inflation rate in Jordan is expected to increase to 3.3 percent this year,
compared to 1.3 percent last year, while next year it can be expected to
decline to 2.5 percent.
اضافة اعلان
Economic experts
interviewed by
Jordan News agree with the World Bank’s forecast, especially
in light of the significant increase in the prices of foodstuffs and goods
brought about by the war in
Ukraine, income insecurity, and the difficult
economic situation.
Economist Mazen
Irshaid told
Jordan News that the World Bank predictions are logical, as
the inflation rate before the war in Ukraine was 2 per cent, “but after the
onset of the crisis, things have changed completely”.
He said that the
“inflation rates may reach about 3.5 to 4 per cent if the crisis continues”.
Irshaid added
that the rise in
inflation depends mainly on the length of the war, “especially
since we import from abroad most of our basic needs, including energy sources”.
He said that
prices in the local markets began to rise about a month and a half ago, “which
indicates that a significant increase in the inflation rate is likely to
happen”.
“As for the solutions to mitigate the impact of inflation, monitoring the
markets and setting price caps on basic goods can help, but I can say that, in
general, there are no quick and radical solutions,” he added.
According to
Irshaid, food security in Jordan is threatened, “which confirms the importance
of developing long-term plans that enhance export and self-reliance, and reduce
imports, so that Jordan is able to confront external factors that would
influence the increase in the rate of inflation”.
Economist
Mohammad Al-Bashir told
Jordan News that a rise in the inflation rate to
3.3 percent is very likely, “based on the fact that the income is stable and
prices are rising at the same time”.
He said that the
“purchasing power of citizens is a real indicator of the inflation rate”,
stressing that the Ukraine war and the
COVID-19 pandemic are two important
issues that contributed to aggravating the economic crisis in Jordan, which
suffers from economic problems, clearly shown in the balance of trade, where
the import bill is really large”.
Bashir added
that “we still rely on imports and do not give importance to exports”, and that
growing prices and costs, most notably the sales tax and the energy cost, and
the high rate of social security deduction from workers’ salaries were
instrumental in the companies’ reluctance to export.
He stressed that
under the current circumstances, and if the war continues, “inflation rates may
reach about 5 percent”.
Economist Zyan
Zawwaneh told
Jordan News that while inflation rates are affected by
external and internal factors, “what really affects us nowadays are external
factors like high prices of production inputs and the high prices of basic needs
that we import”.
He said that
“there is a real fear” that stagflation could occur, “which happens when there
is a raise in prices and inflation rates, and lack of demand. This is one of
the most serious types of economic problems that is difficult to address”.
“What is really
difficult is that Jordan has been suffering from economic challenges for many
years, including the high unemployment rate and high water and energy bills,
and this interacts with the drivers of inflation rates and creates very difficult
economic conditions,” he said.
According to Zawwaneh,
“what is really unfortunate is that successive governments were unable to
develop solutions that truly address the economic challenges. The government
must immediately start developing medium and long-term plans to reduce imports
and increase reliance on exports”.
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