Jordan's GDP growth will rise gradually to 2.2% in 2019 and 2.6% in the medium term, according to the World Bank in its April 2019 report.

In its report entitled "External Reforms and Disadvantages - The Link between Employment and Productivity", the Bank noted that this "export-led" recovery depended on restoring macroeconomic stability and a supportive external environment, including official support as outlined in the London Initiative, The cost of power generation,and the stability of international oil prices. 

The report pointed out that the expectations of the Jordanian economy reflect renewed momentum in view of the recent signs of renewed international support through the London initiative. The Bank noted that the spread of poverty and deprivation remain important issues, ruling out the decline in poverty levels in the Kingdom.

He pointed out that even if there is a decline in poverty, it may be a "slight decline." He pointed out that the labour market has not been able to provide enough skilled jobs for Jordan's educated youth, as patterns of unemployment continue to marginalize females, youth and university graduates.

"One out of three working-age workers in Jordan is re-allocating jobs from high productivity sectors to low productivity sectors in the informal sector, and an increasing number of workers have no social insurance or legal contract," he said. "Jordan is keen to cut taxes on wages because at present the wage tax is applied at a gradual rate of between 7 and 20 percent, but it must be accompanied by other reforms," the bank said.

 He pointed out that in cases where current and financial transaction balances did not move together closely "as is the case for countries including Jordan", policymakers may be forced to rely more on increasing total labour productivity in order to gradually reduce the current account deficit. Jordan's real gross domestic product (GDP) grew by 2% in 2018, marginally lower than its growth in 2017, constrained by structural constraints and a difficult regional environment. On the supply side, the dominant momentum is from the strong services sector (which contributed 1.5% to GDP growth), followed by the industrial sector (0.4%).

 On the demand side, the growth resulting from the significant improvement in net exports faced a significant contraction in private demand during the first half of 2018. Investment growth was moderate due to a significant decline in public capital spending and weak private investment flows. However, Jordan remains vulnerable to both domestic and external shocks. There is a need to gradually and steadily adjust the fiscal situation and continue to implement reforms in investment, labour, procurement and partnership between public and private sectors and energy to successfully mitigate these challenges and improve conditions for higher and more comprehensive growth and promotion.

Productivity and improving family well-being. The current account deficit widened significantly in 2018 by more than 3 percentage points of GDP, supported by strong service performance and declining imports. The main drivers were the strong hospitality sector, with services exports improving by 13% and the large drop in non-energy imports. Remittances from abroad remained weak, while foreign direct investment flows fell by half.

Despite these improvements in revenue from travel fees and non-energy imports, external sector financing remained a challenge. As a result, the CBJ's total usable reserves at the end of 2018 reached $ 12.5 billion (covering 6.2 months of imports) Imports at the end of 2017. The fiscal deficit (including grants) has widened and reversed the previous situation, closing at 3.3% of GDP in 2018, 1.4% higher than the budget target. This was due to limited revenue growth and high recurrent spending.

 The fiscal measures introduced in 2018 have not been realized due to weak economic activity and difficult socio-economic conditions.

 As a result, local revenue collection was weak with growth rates of only 3% compared to the target of 16%. Recurrent spending rose to 25.3 percent of GDP, up 0.7 percentage points from 2017 levels, while capital spending fell by 0.6 percent of GDP.

High unemployment indicators and low labour force participation reflect a weak job creation, as the unemployment rate is high 18.6 % in the third quarter of 2018, slightly higher in the annual average of 18.3% in 2017.

 The labour market has not been able to provide enough skilled jobs for Jordan's educated youth and patterns of unemployment have consistently shown the marginalization of females, youth and university graduates.

 In addition, the workforce participation rate in Jordan fell 36.8% in the third quarter of 2018, well below the annual average of 39.2% in 2017. The prevalence of poverty and deprivation remains an important issue. Data on poverty in the 2010/11 period preceding the Syrian crisis showed that 14.4% of Jordanians fall below the national poverty line and 18% are vulnerable to poverty.
The bank hinted at excluding it from the decline in levels of poverty and deprivation in the Kingdom, and pointed out that even if there is a retreat, it may be a slight decline. He noted that one out of three working-age workers in Jordan was working and reallocating employment from high productivity sectors to low productive sectors in the informal sector.
An increasing number of workers do not have social insurance or a legal contract. High population growth, both among Jordanians and refugees, means that a large number of jobs are needed to significantly increase employment. Economic Prospect.

According to the report, GDP growth is expected to rise gradually to 2.2% in 2019 and 2.6 in the medium term. This export-led recovery is expected to restore macroeconomic stability, a supportive external environment, including official support as outlined in the London Initiative, lower cost of power generation and stabilization of international oil prices.
The current account balance is expected to gradually ease as the trade balance improves through a rebound in exports and a drop in energy-related imports.

The key enabling factors are the re-opening of Iraq's borders and associated trade and investment agreements, and the faster-than-expected participation of local companies in the EU agreement. FDI flows and multilateral, bilateral and private debt-generating flows are expected to be the main sources of funding.
It is also expected to narrow the fiscal deficit in 2019, through strong mobilization of domestic revenue, supported by the new income tax law.

In the medium term, the initial balance, including grants, is expected to decrease by about 1% of GDP with measures to increase revenues and recover electricity and water costs.

Adjusting fiscal positions and anticipating increased budget flows will improve debt dynamics over the medium term.

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