Jordan’s economy: 3% growth amidst inflation control

(File photo: Jordan News)
AMMAN Standard & Poor's credit rating agency anticipates an average GDP growth rate of 3 percent for Jordan during the years 2023-2026. This assessment aligns with Jordan's success in maintaining its credit ratingat 'B+/B' with a stable outlook. Inflation in Jordan is expected to significantly ease, following a 2.7 percent price increase in the first seven months of 2023, compared to an annual average of 4.2 percent in 2022. The forecasted average inflation rate is 2.6 percent from 2023 to 2026.اضافة اعلان

The agency also predicts a 2.8 percent growth in the Jordanian economy for the current year, attributing this positive outlook to the structural reforms initiated by the government. Efforts to manage inflation include maintaining the peg of the Jordanian Dinar to the US Dollar, Al Mamlaka TV reported.

Strategic food stockpiling and long-term gas import contracts have contributed to relative stability in food and household energy costs.

These measures have collectively mitigated some of the impacts of fluctuations in basic commodity prices over the past year.

International supportIn June 2023, the International Monetary Fund (IMF) successfully completed its sixth review of Jordan's Extended Fund Facility program, which commenced in 2020. Jordan continues to receive ongoing technical and financial support from the IMF.

Furthermore, Jordan has received additional multilateral and bilateral support from institutions such as the World Bank, the European Bank for Reconstruction and Development, the United States, and the European Union, among others.

While competition for donor funds is expected to intensify due to the ongoing conflict in Ukraine, the agency anticipates further assistance.

Navigating global economic challenges
Jordan's economy has faced numerous challenges in recent years, including the indirect consequences of the Syrian conflict, the COVID-19 pandemic, and the Ukraine crisis.

These events led to an increase in unemployment rates, a rise in public debt, and persistent pressures stemming from the hosting of nearly 1.3 million Syrian refugees, accounting for approximately 11 percent of Jordan's population.

To address these challenges, Jordanian authorities have prioritized structural reforms, with the support of the IMF. Progress in financial reforms, particularly in tax compliance, is yielding positive results. Additionally, plans are underway to address state-owned enterprises, notably the National Electric Power Company and the Water Authority.

Losses incurred by the National Electric Power Company and the Water Authority
The agency expects combined losses for the National Electric Power Company and the Water Authority to increase from 1.5 percent of GDP in 2022 to approximately 1.9 percent in the current year. This rise in losses is accompanied by debt levels reaching about 10.5 percent of GDP in 2022.

A significant portion of these losses is attributed to the "expensive" power purchase agreement initially signed in 2014.

Both entities are presently undergoing restructuring efforts, with the potential to establish a more financially sustainable foundation.

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