Unprecedented price hikes

Salameh Darawi
Salameh Darawi (Photo: Jordan News)
The Jordanian Economic Forum has issued a highly significant economic paper on the impact of price spikes in countries of origin and their effects on the Jordanian economy. The paper serves as an early warning for the government to prepare for a substantial upcoming rise in global prices. This will have a significant impact on the local market and the livelihoods of citizens, whose meager incomes will be subjected to new drains and additional burdens.اضافة اعلان

The crazy price spike that is currently taking place in global markets is not limited to one commodity, such as oil, as the case was in the past. It now manifests itself as an increase in the price of most major commodities, including food, agricultural products, raw materials, and fluctuating shipping prices, which have multiplied by more than 13.

The trade issues witnessed around the world of today between big and rich countries have produced a price that is paid by small importing countries, such as Jordan, which seek to secure their needs. There is a frantic race among countries to store vast supplies of raw materials and essential goods, not to mention that many essential commodities like food products, have had production shortages in their countries of origin.

This has damaged production and harvests, such as what happened with corn and rice, resulting in vast and successive price hikes. For instance, sugar increased by 35 percent, rice by 25 percent, oil has neared 100 percent, and raw materials were up by 5 percent. Also included are production materials such as steel, copper, aluminum, fertilizers, and others, which are on an unprecedented rise.

Jordan's economy is quite susceptible to the repercussion of these developments, and it is not very proactive regarding what is going on globally. This is due to its small size and reliance on imports, as the country buys more than 90 percent of its needs. As a result, Jordan is too powerless to alter the global trade equation.

Internally, the government should take some preventive measures aimed at mitigating the economic impact and threats to consumers, particularly those of middle and low incomes. It should also try to keep the wheel of industrial production running.

The government is obliged to make its moves in the face of the global wave of high prices, the most important of which should be storage and having in place a food security system. It needs to push the wheel of investment in this sector and grant it exemptions and incentives that enable the private sector, in partnership with the government, to build large warehouses to preserve products for long periods of time, and enable both sectors to store products before prices go higher. Unfortunately, existing private storage facilities, some of which are success stories, suffer from government pressure.

They also suffer from unreasonable fines imposed under the pretext that warehouses practiced leasing and thus violated the Investment Law. These practices on the part of authorities constitute a huge impediment to efforts aimed at boosting food security in the Kingdom, and there are many real examples that illustrate this point.

Facing rising prices, the only solution available to the government to mitigate impacts on local markets is to exempt investors from some fees and make life easier for citizens.

The fear is that the government may stay paralyzed by the uncontrollable global price changes, in the absence of effective measures to curb the enormous hikes. If that were the case, then the living and industrial situation will be dreadful.

What is required is quick and adequate collaboration between the government and the private sector, the formation of a joint crisis cell with the private sector, and arrangements to protect local markets as much as possible from the crazy price hikes by securing material and essential commodities at acceptable prices.

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