Economic Profile - Jordan

Capital: Amman
Currency: Jordanian dinar (JOD)
Language: Arabic

Key Data	2006	2007	2008*
Population (millions)	5.600	5.723	5.854
GDP (USD billions)	14.839	16.532	20.030
Per capita GDP (USD)	1640.839	2,888.780	3,421.375
Real Growth in GDP	7.975	6.581	6.000
Inflation (CPI)	7.573	5.385	14.925
Exchange Rate (USD)	n/a	n/a	n/a
Exchange Rate (CAD)	n/a	n/a	n/a
Current Account (GDP)	-10.772	-16.803	-12.685
Fiscal Balance/GDP	n/a	n/a	n/a
Short-term interest rate	n/a	n/a	n/a

*Projections
Source: World Economic Outlook IMF April 2008

Key Economic Trends

The Jordanian economy performed exceptionally well in 2004, with real gross domestic product (GDP) growth estimated at more than 7%, the highest achieved since 1992. The growth in 2004 compares favourably with the 3.6% growth in 2003 and 5.4% growth in 2002.

The surge in business confidence, the expansionary fiscal policy, the increase in exports (especially to the U.S.), higher capital inflows (especially from Iraqis), the rise in consumer lending, the higher remittances from Jordanians working in the Gulf, and the financial aid that the country is receiving has contributed to the strong economic performance in 2004 and is expected to continue to do so in 2005.

All economic sectors performed well in 2004. The best performer, the construction sector, continues to show strong growth. Strong recovery was recorded in the tourism and transport sectors.

Source: CIA World Factbook,  March 2009:
www.cia.gov/library/publications/the-world-factbook/geos/jo.html

Economic Structure

GDP by sector	agriculture: 3.6% industry: 10.1% services: 86.3%	Key Imports	crude oil, machinery, transport equipment, iron, cereals
Major industries	phosphate mining, pharmaceuticals, petroleum refining, cement, potash	Major export destinations	US 22.4%, Iraq 12.9%, India 8.3%, UAE 7.8%, Saudi Arabia 7.5%, Syria 4.9% (2007)
Key Exports	clothing, phosphates, fertilizers, potash, vegetables, pharmaceuticals	Major import sources	Saudi Arabia 21%, China 9.7%, Germany 7.5%, US 4.7%, Egypt 4.4% (2007)

Source: CIA World Factbook,  March 2009
www.cia.gov/library/publications/the-world-factbook/geos/jo.html

Economic Policies

Since Jordan's graduation from its most recent IMF program in 2002, Amman has continued to follow IMF guidelines, practising careful monetary policy, making substantial headway with privatization, and opening the trade regime. Nevertheless, political  considerations  will  also  prevent  the  government  from  reining  in budgetary spending, despite the poor state of the public finances and IMF calls for  fiscal  retrenchment,  and  instead  it  has  proposed  a  fiscal  stimulus  for  this year (focussed on agriculture, construction and tourism). Government policy will focus on implementing the new National Investment Strategy (NIS), which is in the process of being drawn up by various government departments, in consultation with  key businesses  leaders, and will be launched  this year.

Jordan's exports have significantly increased under the free trade accord with the US and Jordanian Qualifying Industrial Zones (QIZ), which allow Jordan to export goods with some Israeli content duty free to the US. The government ended subsidies for petroleum and other consumer goods in 2008 in an effort to control the budget. The main challenges facing Jordan are reducing dependence on foreign grants, reducing the growing budget deficit, attracting investments, and creating jobs. Jordan is currently exploring nuclear power generation to forestall energy shortfalls.

Source: CIA World Factbook, March 2009:
www.cia.gov/library/publications/the-world-factbook/geos/jo.html

Foreign direct investment

At a time of uncertainty,  there  have  been  encouraging signs of continued interest from Gulf Arab investors. Jordan and Qatar recently agreed to create a US$2bn fund that will focus  on  joint public- and  private-sector projects across  a  range  of  sectors. Saudi Arabian investors have also retained their focus on Jordan with the  Saudi-Jordanian Business Council agreeing in 2008 to  set up a new US$500m investment  company in the first half of 2009. Although neither of the two funds is likely to generate much  investment activity this year - reflecting both the present global economic  turmoil,  and  the  fact  that  identifying  suitable  investment opportunities could prove a time-consuming process - the continued interest of both  Qatari  and  Saudi  Arabian  investors  in  Jordan  should  help  to  buttress local confidence in the economy.

Source : Economist Intelligence Unit,  2009, ww.eiu.com, Country Profile JO

Trade Agreements and Canadian Trade with Jordan

• Membership in trade agreements and other multilateral or trade agreements. Jordan is a member of the World Trade Organization (WTO) and ratified an association agreement with the European Union in addition to an existing Free Trade Agreement (FTA) with the USA. Jordan is also a member of the Greater Arab Free Trade Agreement (GAFTA), which aims at dismantling barriers to inter-Arab trade and investment. Furthermore, Jordan has bilateral trade agreements with a number of Arab countries, including: Qatar, Oman, Bahrain, Kuwait, United Arab Emirates, Saudi Arabia, Iraq, Yemen, Libya, Sudan, Egypt, Djibouti, Morocco, Tunisia, Syria, Lebanon, Palestinian National Authority and Algeria. Canada and Jordan have concluded negotiations of a Free Trade Agreement (FTA) in addition to Foreign Investment Protection Agreement (FIPA) and have recently signed a Nuclear Cooperation Agreement (NCA) as well as an Air Services Agreement.
• Main Canadian exports to Jordan; sectors, products and services. In 2008 Canadian exports to Jordan amounted to $76.8 million, with newsprint, copper wires, lumber, lentils and chickpeas being the top five products.
• Main Canadian imports from Jordan; sectors, products and services. In 2008 Jordanian exports to Canada amounted to $15.4 million, with apparel, potassium nitrate, aircraft engines, imitation jewellery and medicaments being the top five products, with Jordan ranking #110 as a supplier to the Canadian market.

Source : Industry Canada, www.strategis.gc.ca

Investment in Jordan

The major advantages of doing business in Jordan are the kingdom's modern communications infrastructure, good financial services, skilled workforce, and the wide use of English (as well as Arabic) in business. In addition, companies are not hampered by stringent foreign exchange regulations or wide ranging import restrictions. Furthermore, Jordan enjoys internal security and stability, has a free market oriented economy, an attractive investment climate, an advanced judiciary and communications systems, a developed banking system, in addition to one of the most advanced and well regulated capital markets in the Middle East.

Financing and credit are available from both the commercial banking system in Jordan and local branches of foreign banks. Subsidiaries located in Jordan are subject to tax at the same rates as local Jordanian companies. Regional and representative offices enjoy tax and duty-free status but are not permitted to earn income in Jordan. Projects based in the free zones are also exempted from taxes and duties. Profits can be freely remitted, as is the major part of expatriates' salaries.

Jordan's conservative banking sector has been largely protected from the worldwide financial crisis, but many businesses, particularly in the tourism and real estate sector, are predicting a slow-down in 2009.

In 2006 and 2008, Jordan used privatization proceeds to significantly reduce its debt-to-GDP ratio. These measures have helped improve productivity and have made Jordan more attractive for foreign investment.

Source: Canadian Embassy in Jordan
Source: CIA World Factbook, March 2009
www.cia.gov/library/publications/the-world-factbook/geos/jo.html

Additional sources of economic information on Jordan:

• World Bank: www.worldbank.org
• IMF: www.imf.org
• OECD: www.oecd.org/home
• Jordan (Central Bank): www.cbj.gov.jo
• Jordan (International Economic Affairs Unit): www.mfa.gov.jo/pages.php?menu_id=88
• Jordan (Department of Statistics): www.dos.gov.jo/dos_home_e/main/index.htm

April 2009