Challenges of the Jordanian economy

Due to unforeseen circumstances over the past month, I was unable to respond to requests from my brothers and sisters on Arab television stations or newspaper correspondents to answer questions related to the situation in the region. Nor, as a veteran of the Jordanian and Gulf economic experience, was I able to answer questions from many of my Jordanian brothers concerned about the policies of US President Donald Trump and their profound impact on the economies of the region and the Jordanian economy in particular.

We know that the Jordanian people, in all their components, are concerned about their economy, whose nominal annual GDP is valued at $54 billion, or the purchasing power parity equivalent of $141.2 billion. Jordan ranks 91st globally, according to 2024 figures.

The nominal per capita income (NPCI) is approximately $4,705, or approximately $12,400 per year in purchasing power parity. These figures demonstrate that Jordan is a middle-income country, commensurate with its potential and natural resources.

During the period of successive crises since 2008 until now, starting with the collapse of the global real estate and financial markets in that year, then the devastating Arab Spring that shattered the dreams of the Arab nation and its countries, which extended until this writing (Sudan, Libya, Syria, and Iraq), through the COVID-19 pandemic, and ending with the war in Gaza, the West Bank, southern Syria, and southern Lebanon. Throughout all these crises, Jordan, along with the six sister countries in the Gulf and Egypt, has been the most steadfast. If we measure the consequences borne by Jordan in comparison to its limited resources and available capabilities, we would see it as the most capable Arab country in responding with high flexibility and effectiveness to the emergencies it faced.

Since the Hani Mulki government, in which I served as Deputy Prime Minister and head of the ministerial economic team for a short period of just over six months, and the subsequent governments of Omar Razzaz, Bisher Al-Khasawneh, and Jafar Hassan, the Jordanian economy has achieved growth rates ranging between 2.2% and 2.5% per year, within an inflation rate of approximately 4% per year. Unemployment rates fluctuate seasonally between 18% and 22%, and poverty rates are no less than 14%, with emerging cases of extreme poverty.

However, there are positive indicators that have supported Jordan, including increased Jordanian economic exchange with major countries outside the Arab world, such as the United States, China, and India. Its largest Arab trading partners are Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, and Egypt. However, it is clear that Jordan, which exports approximately $16 billion annually, sends $3 billion of that to the United States, most of which is clothing, under the free trade agreement between the two countries. Furthermore, $1.5 billion or more will be coming to Jordan by the end of 2024 from the United States in the form of aid, of which approximately $850 million is allocated to support the budget.

In the absence of Arab support, these two figures (exports to the United States and aid from it) would amount to approximately $4.5 billion annually. However, any serious dispute with the United States would impact Jordan far more significantly. The Caesar Act limits trade and services with neighboring Syria and prevents the supply of electricity to Lebanon. The only outlet through which Jordan has begun exporting its surplus electricity is the one leading to western Iraq, in Anbar Governorate, on the Jordanian-Iraqi border. Therefore, the continuation of the war on Gaza with blatant American support, along with the Jewish state's violation of all international norms, systems, and rules in the occupied West Bank, its threat to annex the territory, and its depopulation of Gaza in agreement with Trump, will impose new challenges on Jordan.

Faced with this reality and these challenges, the hearts of Jordanians—even though made of steel—cannot remain still and unshakable in the face of these fluctuations. It is noticeable that these fears of the past, present, and future have left many Jordanians in a state of shock, and some seem drunk when they are not, walking on a hot tin roof, as depicted in the American writer Tennessee Williams' play "Cat on a Hot Tin Roof."

We've recently noticed a rise in drug use and smuggling. Our brothers in Saudi Arabia periodically bring us news of Jordanians being executed for drug smuggling, most of which originates via Syria. We've begun to see a language we thought had died out, speaking of disagreements between Jordan's various communities. The language of bravado and bravado has once again resurfaced.

The reason is not only the government's failure to support and expand social protection programs, starting with King Abdullah II, Crown Prince Hussein bin Abdullah II, Queen Rania Al Abdullah, the Hashemite Charity Organization, the Ministry of Social Development, and the Royal Hashemite Court, but also the work of charitable associations and civil society organizations, including professional and labor unions, and active women's movements, of which one is proud. All of this exists, but the "pile" of concerns is growing and growing every day. The number of bounced checks in Jordan increased by 10% in 2024 compared to the previous year. Furthermore, many Jordanians are resorting to borrowing or liquidating fixed assets such as real estate to cover the liquidity shortage resulting from Jordanians spending more than their income.

All of these are attempts by Jordanian families to make ends meet in light of rising prices, with many of what were once considered luxury goods now considered essential goods. The irregular transportation system, despite efforts to regulate it, forces families to purchase one or more cars. Furthermore, the number of mobile phones in Jordan, according to the latest available statistics, exceeds the number of its population. Jordan ranks 62nd among countries in this indicator.

The reality that places even greater pressure on Jordan is the decline in trade with its neighbors, especially Syria, Iraq, and the occupied West Bank, whose entrances are controlled by the occupying power.

But there are other issues. Jordanians are among the world's largest cigarette consumers, accounting for 43% of the population. The smoking ban is one of the most frequently violated laws in Jordan, even by members of parliament (now it's becoming more stringent).

Here the dilemma becomes apparent, as Jordan, on the one hand, collects from various taxes and fees on cars, fuel, cigarettes, and beverages in general, especially soft drinks, amounts that may approach four billion dinars, or approximately 40% of all taxes (especially sales), which makes the government in solidarity with smokers and consumers of fossil fuels and their derivatives, cars, and soft drinks.

On the other hand, studies on the amount the public treasury incurs annually due to spending on treating patients (cancer, diabetes, heart disease, and kidney failure) due to this consumption indicate that it is insufficient.

Most economic questions in Jordan currently focus not on these social, familial, and humanitarian issues that must be addressed, but rather on the questions of high-income earners or expatriate workers who want to preserve their hard-earned savings: What will happen to the dinar? Should we buy dollars? Should we buy gold? Should we buy other currencies? Or should we invest in another safe haven, such as real estate?

I believe the Central Bank of Jordan and the government's economic team should explain directly and transparently to the public the question: Why did the Central Bank sell three tons of gold, as reported in reliable international financial publications?

In my opinion, this is not of major significance to the dinar's status, as the process involved exchanging one balance for another. The fundamental fact is that the Central Bank has more than $20 billion in foreign currency reserves, sufficient by all standards to protect the dinar's exchange rate and maintain its stability.

Others fear for the dinar, which is pegged to the dollar, from a decline in the value of the US currency, which has clearly declined since Trump declared his trade war through tariffs on the world on March 4 of this year. This has led to a decline in the dollar's exchange rate against the euro, the British pound, the Japanese yen, and the Swiss franc over the past week. Many Jordanians have asked: What should we do? The answer I have is one: the vast majority of our income is in dollars, and most of our foreign bills are paid in dollars. Currencies will remain susceptible to fluctuations around their original exchange rate. We have no interest in taking the risk of using the dollar exchange rate as a tool for monetary policy. The easiest way is to increase our dollar holdings, because despite all the talk about the beginning of the decline of the SWIFT payment system and the use of the dollar as an international exchange currency, this will not happen now in a significant way, but rather in the not-so-distant future.

Jordan's economic officials must strive to increase national production, develop human capital, and explore avenues for reducing Jordan's imports of goods and services and maximizing exportable goods. Positive steps are being taken in this direction by ministries such as agriculture, the digital economy, and youth and women's empowerment. The Ministry of Labor, in particular, and the government in general, are also making informed efforts to expand employment opportunities for Jordanian workers.