Jordan Development Study

One of the smaller countries in the Middle East, Jordan is strategically important in a volatile region, having emerged relatively unscathed from the Arab Spring. A homogeneous country with a high proportion of Palestinians, Jordan has a relatively young population that has sharply increased in recent years, due to the influx of Syrian refugees. Jordan is a parliamentary constitutional monarchy, and King Abdullah II has ruled since 1999.
Jordan has a well-educated and skilled workforce, and a strong banking system. Its GDP increased by 2,38% during 2015 and reached a value of USD 37,52 billion. In spite of high youth unemployment and a large government budget deficit, compounded by the heavy refugee-burden, Jordan has managed to maintain a small but steady growth during the past 5 years. A predominantly importing country, Jordan is characterized by large trade deficits, with net trade in goods and services amounting to USD -8.4 billion in 2015. Inflation is estimated to remain low and stable at levels around 2%.
Considered a politically safe and stable country with untapped potential across many sectors, Jordan has a relatively progressive business environment. The World Bank ranked it 118 out of the 189 countries surveyed in its Doing Business 2017.
Jordan has long been fully reliant on energy imports to meet its rising domestic demand of energy. Although the country lacks the petroleum resources defining the economies of many countries in the region, the Jordanian energy industry has emerged as one of the most dynamic in the Middle East, focusing on renewables as the core element of the its future energy system. The development of renewable forms of energy, in addition to nuclear, will significantly boost domestic capacity and reduce Jordan’s fuel bill that has skyrocketed in recent years.
One of driest countries on earth, Jordan faces a critical imbalance between supply and demand of water. Amidst a steady population growth and ageing infrastructure that loses up to 50% of water through system leakages, the management of scarce water resources is a major issue for the government that is increasingly advocating coordinated investments and interventions relating to maintenance and upgrades of existing water networks.
The Jordanian food and drinks industry has thrived in recent years, in spite of an overall rough economic climate. Jordan is a net food importing country with a growing market of consumers, purchasing up to 95% of consumable items from abroad. The country’s climate enables cultivation of out-of-season produce, and European countries in particular pose a promising market for Jordanian farmers. The grocery retail market in Jordan is dominated by smaller retailers, but modern western style mass grocery retailers are gradually eating into the small retail market.
Jordan’s ICT sector is one of the most developed and robust in the region, bolstered by 15 years of industry-friendly policy and a young, well-educated and growing population of digital consumers. The ICT sector is contributing 12% to GDP and growing by 25% on average, while offering 84,000 jobs. Jordan’s ICT sector hosts more than 600 active technology companies, including 300 startups, and the sector attracts an average of USD 150 million in investments annually.
The real estate sector is an important driver for economic growth in Jordan, having contributed on average more than 5% of GDP during the past decade. However, oversupply in the retail, high-end residential and commercial markets has slowed down development in the sector lately, which is also facing challenges relating to the increasing price of land.
In terms of transportation and logistics, this sector accounts for approximately 10% of Jordan’s GDP and is growing at an annual rate of 6%. In the past decade, the GoJ has been heavily investing in the transportation sector by expanding the road sector, improving urban mobility, enhancing the logistic industry, opening a new sea port in Aqaba, expanding the Queen Alia International Airport, as well as planning and designing a national railway network.
Tourism is one of the major sectors of the Jordanian economy, and its contribution to the national GDP is considerable. The wealth and diversity of tourism sites in Jordan that appeal to very different market segments is a major strength. The main challenge facing Jordan as a tourist destination is its location in a volatile region, which makes its vulnerability to international visitors very high when the surrounding areas experience political turmoil.