Economic Update

The final draft of a new economic programme, targeted for the end of August, will set a new path for socio-economic development in Jordan, as part of a wider ten-year blueprint launched in May. Jordan 2025 (also known as Vision 2025) − which was presented by King Abdullah II and Prime Minister Abdullah Ensour − aims to revitalize the kingdom’s economy by targeting poverty, unemployment and the fiscal deficit, and boosting annual GDP growth.

Jordan 2025 will be implemented via three consecutive executive development programmes (EDPs), the first of which will run from late 2015 until the end of 2018. Each programme will be evaluated at the end of its three-year run in order to better inform the implementation of the following stage.

In May, the minister of planning and international cooperation, Imad Fakhoury, led a meeting of the coordination committee for preparing the 2016-2018 EDP, which will include the first phase of the Jordan 2025 vision and national strategy. Fakhoury noted that the final draft of the programme is targeted for the end of August.  

GDP boost

Jordan reported annual GDP growth ranging between 2.3% and 2.8% from 2009 to 2013. Although this improved slightly last year − with 2014 expansion registered at 3.1% − economic pressures caused in part by disruption in gas supplies from Egypt and the influx of refugees from Syria have kept the country’s annual growth rate below the seven percent target recommended by the IMF to effectively fight poverty and unemployment.

Implementation of Jordan 2025, it is hoped, will help boost GDP growth rates and reduce the nation’s budget deficit, bringing about much needed improvements to the lives and per capita wealth of Jordanians.

At the end of July, the IMF noted that fiscal consolidation is expected to help stabilise public debt this year, thanks to lower oil prices, while the current account deficit is narrowing. Despite significant challenges remaining, the new economic blueprint will help address these issues. “There is also a need to move on structural reforms geared to job creation, and focused on labour market reform as well as improvements in the business climate and the quality of public institutions,” said the IMF in its review of the country. “Vision 2025 … is an opportunity to address these challenges, and an important step will be to anchor it in a medium-term macro-fiscal framework.”

Targets higher trade

Under the plan’s targeted scenario, the authorities aim to progressively boost annual GDP growth from 3.1% in 2014 to 4.9% three years later, 6.9% by 2021 and 7.5% by 2025. The plan also seeks to reduce the budget deficit to zero by 2025, from a deficit of 3.5% of GDP after grants in 2014, and thereby gradually reduce overall debt from 82.3% of GDP in 2014 to 47.4% by 2025.

To achieve these targets, Jordan 2025 seeks to reverse what it describes as a recent deterioration in the nation’s competitiveness relative to other countries. It is looking to pursue an export-oriented economic strategy, primarily by boosting trade with other countries in the region, particularly the GCC states. This will be attained through various efforts to create a more attractive business environment, including improving the rule of law and transparency of government affairs, and leveraging the kingdom’s political stability.

The use of public-private partnerships and provision of tax credits to firms that attain international certification will be applied to help raise standards in both government and private sectors, all in the hope of supporting the country in its goal to move up from 114 to 75 in the World Bank ease of doing business rankings. In addition, nuclear energy sources will be developed to help reduce the country’s dependence on energy imports, with the government aiming to boost the contribution of nuclear energy in the energy mix from 2% in 2014 to 39% by 2025.

Cluster approach to industrial development

To bolster industrial development, Jordan 2025 adopts a cluster-focused approach that seeks to expand existing industries that are performing well, while developing related or supportive clusters complementary to those industries. The plan identifies eight clusters as having high potential for development: construction and engineering, transport and logistics, tourism and events, health care, life sciences, digital and business services, educational services and financial services.

Jordan’s National Competitiveness and Innovation Committee will establish cluster coordination committees to support the development of selected sectors; committees will undertake tasks such as coordinating networking between clusters and ensuring that emerging clusters receive sufficient guidance from various training and educational institutions.

By focusing on specific industry clusters, Jordan 2025 aims to modify the composition of the country’s economic output by boosting agriculture (from 2.9% to 3.4%), industry (from 22.4% to 27.4%) and construction (from 4.2% to 5.8%).