As can be read from focus published by Intesa Sanpaolo, in the first nine months of 2012, Jordanian GDP growth amounted to 2,8%, thanks to the contribution of financial services and real estate (20% of GDP), followed by transport and communications (15%), trade and catering (12%). Manufacturing production, on the other hand, recorded a lower growth rate than in 2011 (+2,5% against +4,1%) following the decrease in the production of building materials and chemicals, while refining and food processing performances are accelerated. The extraction of phosphates and potash presented a contraction of 2,2% reflecting the lower foreign demand and the interruptions of work due to social tensions. The signals that come from the cyclical indicators provided by the Central Bank highlight one slowdown in the economy in the final months of 2012, in particular as regards the activities most influenced by the external situation, such as cargo planes, port services and arrivals from abroad. Internally, there is a marked slowdown in construction while electricity generation was driven by demand from energy-intensive industries.
Jordan's economy is among the most open in the Middle East, with the sum of imports and exports approaching 90% of GDP. Income from tourism, export activity through the port of Aqaba, remittances from emigrants (given the high overall unemployment, equal to 12,5%), FDI and donations from friendly countries have a significant weight in GDP. Jordan, deprived of raw materials if we exclude potassium from the Dead Sea and deposits of phosphates, has developed an economy based primarily on services, which contribute more than 65% of GDP, while the weight of the manufacturing sector, in particular food products, refining, fertilizers, chemicals and pharmaceuticals, approaches 20%. Given these characteristics, the Jordanian economic system is significantly affected by developments in neighboring countries, in particular through commercial channels towards Iraq and Syria, income from both Middle Eastern and European tourism, investment flows from Gulf countries and expensive energy. Indeed, the Gulf countries employ a large number of Jordanian migrant workers (in the period 2004-08, 85% of remittances came from the GCC countries), absorb a significant share of their exports, invest substantial capital (about 80 % of total FDI in the same period), feed about 40% of tourist flows to the country and support the state budget with generous donations.
The annual rate of inflation jumped to 7,2% last December (compared to 3,3% in the same period of the previous year), mainly due to theincrease in the prices of energy products in November, removing the blockade introduced at the beginning of 2011 to prevent the spread of the protest, which has become too onerous for the state budget. Food subsidies, which account for 36,7% of the index, remained unchanged. Further increases in the prices of energy products and the announced increase in electricity tariffs are expected far raise the average inflation rate to 6,5% in 2013, beyond the official target of 5%. The increase in the energy bill has made maintaining subsidies unsustainable for public finances, resulting in a sharp worsening of the trade deficit and a consistent drain on reserves, factors that prompted the Government to ask for financial support from the IMF. Because of this, in 2013 a slowdown in domestic demand for consumer goods and a lower contribution from public spending, given the repayment plan agreed with the IMF. Investments, on the other hand, are expected to accelerate, thanks to the initiation and completion of some projects in the field of utilities, health and education financed by the Fund established in 2011 by the GCC countries for Morocco and Jordan and by loans from the EBRD and the USA. The economy should also benefit from FDI in the real estate sector and from the acceleration of exports to Arab countries, especially Iraq, after the completion of the development work of the Aqaba container terminal. Donations from the closest political and commercial partners (Saudi Arabia and Qatar above all), after the recent decline, have recovered, while remittances, thanks to the good economic performance in the oil-producing countries of the GCC group, should remain at sustained levels. The GDP is then expected to grow this year by about 3%, at a level however still insufficient to bring about a concrete remedy to the employment and social problems of the country.
