Jordan’s economy demonstrated “notable resilience” during the first half of 2026 despite the negative effects of the conflict in the Middle East, according to the European Bank for Reconstruction and Development (EBRD).
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The bank said in its latest Regional Economic Prospects report, reviewed by Al Mamlaka, that Jordan’s economy grew by 2.9% year-on-year in the first quarter of 2026, supported by strong activity in agriculture, manufacturing and trade.
The EBRD said the economy maintained its resilience despite temporary disruptions to energy supplies and tourism activity in March amid the regional conflict.
Strong activity in agriculture, manufacturing and trade partially offset slower growth in mining, construction and tourism-related services, the report said.
Jordan’s economy grew by 2.8% in 2025, up from 2.5% in 2024, before accelerating to 2.9% year-on-year in the first quarter of 2026.
Comfortable Reserve Levels
The report said Jordan’s international reserves remained at what the bank described as “comfortable” levels, reaching $26.5 billion, equivalent to €23 billion, in July 2026. The reserves covered more than eight months of imports.
In the external sector, Jordan’s current-account deficit narrowed in the first quarter of 2026, driven by lower imports and strong workers’ remittances, despite declines in merchandise exports and tourism revenues.
The trade deficit subsequently widened due to the revaluation of gold holdings and higher spending on energy imports.
On inflation, the EBRD said higher fuel prices pushed inflation to a peak of 2.8% in May before easing to 2.7% in July.
The bank noted that the Central Bank of Jordan raised its key interest rate by 25 basis points in September 2026 to 6%, following a similar move by the US Federal Reserve as part of efforts to maintain the Jordanian dinar’s peg to the US dollar.
Growth Seen at 2.8% in 2027
The EBRD expects Jordan’s economy to grow by 2.5% in 2026, down 0.1 percentage points from its June forecast, before accelerating to 2.8% in 2027, unchanged from its previous projection.
The bank said growth this year is being affected by regional instability, trade disruptions and increased uncertainty surrounding tourism and investment flows.
The report projects a recovery in growth in 2027, provided trade bottlenecks are addressed and energy prices decline.
At the regional level, the EBRD said economies across the southern and eastern Mediterranean showed mixed performance. Jordan and Egypt demonstrated notable resilience during the first half of the year despite the negative effects of the Middle East conflict.
Lebanon, by contrast, was severely affected by wars inside the country and across the region, causing further damage to infrastructure. Iraqi oil exports also continued to be affected by the closure of the Strait of Hormuz, amid a lack of viable short-term alternatives.
The EBRD expects economies across the southern and eastern Mediterranean to contract by 0.7% in 2026, before recording growth of 7.1% in 2027, largely driven by expectations that Iraqi oil exports will return to normal.
Excluding Iraq, the regional outlook appears more stable, with economies in the region expected to grow by 3.9% in 2026 and 4.3% in 2027.
Growth in EBRD Economies Seen Slowing
More broadly, the bank expects growth across the economies in which it invests to slow to 2.5% in 2026, before accelerating to 4% in 2027.
The EBRD cut its 2026 growth forecast by 0.6 percentage points compared with its June projection, while raising its 2027 forecast by 0.4 percentage points.
The bank attributed most of the adjustment to a deep recession in Iraq, where oil exports collapsed, followed by an expected recovery as oil shipments return to normal levels.
Excluding Iraq, the EBRD cut its growth forecast for 2026 by only 0.1 percentage points, citing tighter financing conditions, the impact of drought in Europe and restrictions on shipping through the Black Sea. Its 2027 forecast remained unchanged.
The report, titled “Running Dry,” highlighted growing pressures in three key areas: oil exports, water and global savings, pointing to vulnerabilities in energy systems, food supply chains and financing conditions.
Oil prices rose from around $65 per barrel before the Middle East conflict to more than $100 by April 2026, after seaborne crude exports from the region were cut by half.
According to the EBRD, oil prices remain 30% to 60% above pre-conflict levels, while refined products, particularly diesel and jet fuel, have recorded larger increases than crude oil.
Gas prices have also risen by more than 70% since February, while global seaborne liquefied natural gas exports declined by 40% following the suspension of most shipments from the Middle East.
Disruptions also spread to food markets, with grain shipments from Ukraine and Russia through the Black Sea severely affected by military attacks on infrastructure and vessels.
The bank said Russia and Ukraine together account for around a quarter of global wheat exports. Wheat prices have risen by more than one-third and are expected to remain elevated through 2028.
EBRD Chief Economist Beata Javorcik said the shocks facing economies across the bank’s regions of operation “show no signs of abating,” noting that water scarcity, extreme weather and higher financing costs are combining with rising energy costs to place further pressure on economic growth.
Source: Al Mamlaka
