Jordanian Economy Survives Despite Regional Conflicts and Attacks by ISIS

Jordan, the Middle Eastern nation perhaps best known for its tourist destination of Petra, has never been one of the most powerful economies in the world. Even in the most stable of times, the economy would never have been considered exceedingly robust. Yet, amid all of the warfare and turmoil in the region over the last few years, a flood of refugees, and the recent onslaught of ISIS, Jordan’s economy continues to grow at a respectable rate.

Jordan, the Middle Eastern nation perhaps best known for its tourist destination of Petra, has never been one of the most powerful economies in the world. Even in the most stable of times, the economy would never have been considered exceedingly robust. Yet, amid all of the warfare and turmoil in the region over the last few years, a flood of refugees, and the recent onslaught of ISIS, Jordan’s economy continues to grow at a respectable rate.

Over the last few years, Jordan has remained one nation relatively secure and stable in a sea of warfare, terrorism, and economic collapse. Twenty One percent of Jordan’s population is now made up of Syrian refugees according to a report by Business Insider. While this growing population has become a concern for the kingdom, and a few sectors have suffered, overall the economy continues to grow.

The Bad

The 2011 regional uprisings, sometimes referred to as the Arab Spring, had a profound impact on the kingdom, affecting oil importation from Egypt via a pipeline linking the two nations. As a result, the kingdom had to buy crude oil on the open market, resulting in a $3 billion budget deficit by 2013. This deficit represented 30 percent of Jordan’s GDP.

Regional wars in Iraq and Syria also cut into Jordan’s exports to its neighbors, undermined the Jordanian transportation industry, and virtually erased expatriate remittances. The arrival of refugees also drove up real estate prices, taxed infrastructure, and inflated unemployment in an already tight job market (now at 12 percent overall, and a whopping 30 percent among youth). Furthermore, tourism has dropped by nearly 50 percent since 2010.

The kingdom also has public debt of $32 billion, representing 90 percent of annual GDP. This is considered high for a developing economy

The Good

Surprisingly, many good has happened in the Jordanian economy, as well, despite all of this adversity. Over the last few months, the International Monetary Fund (IMF) and the World Bank have both issued positive reports about economic performance in the kingdom’s economy.

Similarly, leading foreign investors have announced plans to pump additional money into the economy over the next few years. Lebanese businessman Bahaa Hariri recently described a plan, made in conjunction with the Jordanian authorities, to attract $20 billion in foreign direct investment in the energy, water, transport, infrastructure, urban development, and information technology sectors.

Meanwhile, Emirati chairman of real estate company Emaar, Mohamed Alabbar, advised investors to put their money into the kingdom’s increasingly valuable real estate.

The nation has also announced plans to help create 180,000 new jobs by 2025. This should help to counteract some of the unemployment that has been of concern, but more will be required from the private sector if the economy is to continue to work. The IMF estimated that 400,000 new jobs would be needed by 2020.

Despite all of the adversity it has faced, Jordan’s economy has benefited from a US commitment to aid the country with security and financial subsidization. This appeals to investors and it has helped the economy grow at an annualized rate of 3.1 percent so far in 2015 (up from 2.8 percent in 2014).