Investor confidence index declines 11 points in second quarter of 2022

High energy cost and rise of interest rates are among factors behind the reported decline in investors’ confidence. (Photo: Shutterstock)
AMMAN — The Jordanian Investor Confidence Index issued by the Jordan Strategy Forum witnessed a decrease of about 11 points compared to the first quarter of the year; it reached 178.1 points in the second quarter of 2022, while in the first quarter of 2022 it was 189.3 points.اضافة اعلان

In all, the index of confidence in economic activity decreased from 200 points in the first quarter of 2022, to 178 points in the second quarter of 2022.

The value of foreign direct investment inflows also decreased, reaching JD132.4 million in the second quarter of 2022 from JD 260.3 million in the first quarter of the year.

The industrial production index increased from 90.3 points in the first quarter of 2022 to 94.3 points in the second quarter of 2022.

The confidence index in the monetary system decreased from 174.9 points in the first quarter of 2022 to 156.1 points in the second quarter of 2022.

Economist Zyan Zawaneh told Jordan News that the decline in investor confidence in economic activity is linked to a set of indicators, “most notably, the decline in the volume of investment flows and the chaos of managing the investment dossier in general, in addition to the high budget deficit, the decrease in the foreign currency reserves at the Central Bank of Jordan, and the rapid rise in interest rates on the dinar”.

He added that the forecast recession and decline in global economic growth for the rest of the year and for next year, and the “anxious political and military reality in Europe and Britain deepen the state of uncertainty and make internal investors or owners of external capital cautious”.

At the same time, he said, the positive local indicators are summed up in the US payment of aid, which will reduce the budget deficit and increase the central bank reserve, and in improved export and tourism numbers.

The state of uncertainty will deepen as indicators point to an upcoming recession, he added.

Economist Mazen Irsheid said that “this result is normal, especially in view of the rise in investment, manufacturing, and energy costs, and the rise in interest rates at a time when inflation is still at high levels.”

“These reasons led to the difficulty of borrowing from banks,” he told Jordan News.

“As a result, profit margins have shrunk for investors, and it has been noticeable recently that foreign investments in Jordan have declined,” he added.

Economist Mohammad Al-Bashir told Jordan News that investor confidence declined during the last period due to various considerations, “most prominent of which are the high cost of the national economy, especially the sales tax, the rise in energy prices, and the high interest rate, in addition to the lack of seriousness in combating corruption and the absence of a fair distribution of wealth, which contributes to creating a gap between the income of citizens”.

He called for reviewing the structure of the national economy and seriously reconsidering the investment file, “since it brings great benefits to the country, most notably helping solve the unemployment crisis, which has serious effects on society and families”.

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