AMMAN — The revised
Fitch Solutions report, which
suggested that Jordan's economic growth in 2022 would stand at 2.7 percent rather
than 3 percent in light of the Russia-Ukraine conflict, resulting in higher
inflation, reduced purchasing power, a drop in remittances, and an adverse
impact on trade and tourism, has been met with mixed reactions by economists.
اضافة اعلان
"The Russia-Ukraine conflict will likely affect
Jordan through higher inflation on the back of elevated commodity prices, which
will dent the contribution of private consumption and net exports," the
report stated.
Economic and Investment Specialist
Wajdi Makhamreh agrees
with the report. He told
Jordan News that estimations of economic growth
are in decline compared to previous estimates.
"We barely got out of the COVID-19
pandemic impact, and the Russa-Ukraine conflict has started, further complicating the
situation. The conflict has contributed to increased prices of essential goods
like wheat and vegetable oil, as well as a rise in energy costs,"
Makhamreh said.
Political
economy specialist
Zayyan Zawaneh told
Jordan News that the report “is rather
optimistic and not very realistic,” and that 2 percent growth is unattainable
under current circumstances as the world witnesses a crisis of such magnitude, with
a backdrop of economic sanctions, inflation, disruption of supply chains, the
spread of protectionism, scarcity of primary materials, increase in prices of
all essential materials for production, and increased interest rates, “all of
which would place people, governments and central banks under pressure, leaving
all in front of conflicting options," said Zawaneh.
Zawaneh made reference to the
British government's
decision to reduce taxes on essential goods to support the survival of their
people, noting that he foresees a global economic decline and the likelihood of
a global economic downturn, again calling the forecast of 2 percent growth unrealistic.
Economic writer
Salameh Al-Darawi told
Jordan
News that the first report issued by Fitch Solutions forecasting a 3
percent growth was false. He said that the report did not follow the Jordanian
government's projected economic growth of 2.7 percent in 2022, adding that, “this
has been estimated in the budget according to an agreement with the
International Monetary Fund."
However, Darawi stated that the government's projection
did not foresee the
Russia-Ukraine conflict and the repercussions it would
create, noting that Jordan will be directly and indirectly affected by the
conflict. The immediate impact, he said, would be a rise in the prices of
essential goods, which would increase inflation, and the indirect impact would
be the lack of substitutes for critical goods like wheat, barley, and iron.
"Trade exchange between Jordan and
Ukraine is
weak; it is not concerning. But the atmosphere that the conflict is creating on
an international level is concerning," Darawi said.
Economic analyst
Mazen Irsheid told
Jordan News that he expected the results of the revised Fitch report, and called the 2.7
percent projected growth is quite logical.
"The
impact of the increase in inflation internationally ought to affect the Jordanian
economy, which will suffer from a massive increase in inflation. The longer the
war continues, the bigger the risk on the Jordanian economy," said
Irsheid.
Irsheid explained that since Jordan imports most of
its essential needs, there will inevitably be a rise in prices, which would
affect several economic indicators that add up to the gross domestic product,
such as tourism, private consumption, and exports.
“It would be challenging to enhance the economic
growth rate even after the war has ended, because the situation would take time
to settle in light of economic sanctions on
Russia.”
The sector most likely to be harshly affected, the
economists agreed, is Jordan’s tourism sector, noting that a rise in global
prices decreases purchasing power, and changes tourism from a priority to a
luxury. The economists expect tourism, which makes up 20 percent of Jordan’s
gross domestic income, to decline.
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