AS COVID recedes, it leaves behind severe price hike crisis

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AMMAN — With the end of COVID-19 in sight, the prospect of economic recovery in Jordan appears to be temporary halted by an unprecedented increase in consumer products prices. اضافة اعلان

According to a paper issued by the Jordanian Economic Forum in April, the average increase in prices was approximately 13 percent. Consumer purchasing power in the country is already weakened as a result of the economic repercussions of the pandemic, and with the current price hike, the country is on the verge of entering an even worse economic crisis.

Chairman of Amman Chamber of Commerce, Khalil Haj Tawfiq, pinpoints that the decline in economic activity is unprecedented in the country’s history. He views the massive increase in prices across multiple industries as a failure in government policy.

“The step towards economic reform in the country should come directly from the government. Prices are increased even further because of the incredibly high custom taxes,” said Tawfiq in an interview with Jordan News.

“Government officials should invite industry leaders and discuss a comprehensive plan where custom taxes are gradually dropped so that producers are able to lower prices and accommodate the financial capabilities of consumers,” he added.

He also believes Jordan should reconsider its termination of the free trade agreement with Turkey.

“Prices are at an all-time high, and it might be necessary for Jordan to entertain the prospect of rebuilding its trade relationship with Turkey to bring cheaper products to the country.”

If the situation persists, Jordanians could be looking at yet another factor of economic difficulty. A hike in the prices of commodities could see families struggling to make ends meet and to provide basic necessities to their families at a time when unemployment stand around 24 percent as announced by the government, and 50 percent among the youth, according to the World Bank.

The price hikes can be mainly be attributed to the massive disruption that took place in the global supply chain, which once again is a consequence of COVID-19, according to an Earnest and Young study.  Ocean carrier shipping prices went through the roof, increasing 50 percent from their pre-pandemic levels, according to Bloomberg.

Jordan, a country that is highly dependent on imported goods, felt the shockwave of this increase in the global cost of production across many of its sectors. For example, in the past week, the price of one kilogram of chicken skyrocketed from 1.19JDs to 2.08JDS, a 74.7 percent increase, local reports have said.

The economic consequence can be felt on both sides, the consumer, and the producer. A writer for a local news outlet who makes around JD400 per month, expressed her worry over the increase in the price of basic commodities.

She explains how her family has already suffered financially from government lockdowns and restrictions on the economy. They barely survived postponement in salary payments and decline of economic activity. Rice, and other commodities that are increasing in price, formulate an integral part of their consumer basket, a situation that brings a great deal of distress to the family. 

On the flipside, a local plastic producer, explains how the lack of liquidity in the country, coupled with the increase in prices, makes it almost impossible for him to meet his sales obligations and breakeven.

“The prices of raw materials are already increasing globally, and they are subject to hefty custom taxes upon entry. We have no option but to increase our prices, and in a market where consumer purchasing power is continuously declining, our businesses and livelihood are in great jeopardy,” he said.   

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