2016年-世界发展银行全球_Jordan_Economic_Monitor_Fall_2016___Reviving_a_Slowing_Economy_49页_1mb

JORDAN ECONOMIC MONITOR Summary

Core Content

The Jordan Economic Monitor Fall 2016 provides an analysis of the country's economic developments and policy changes over the past six months, placing them in a global and long-term context. It outlines the challenges faced by the Jordanian economy, including the impact of regional instability, particularly the Syrian crisis, and the effects of the Arab Spring. The report also highlights the government's efforts to stimulate growth through various reforms and fiscal measures, and assesses the outlook for the economy amid several risks.

Main Views

• Economic Growth: Jordan's economic growth has been subdued in recent years, with a growth rate of 2.1% in H1-2016, slightly declining from 2.2% in H1-2015. The economy has been operating below its potential since 2013, with a negative and widening output gap. The growth plateau since 2010 reflects a slowdown compared to the previous decade (6.5% average annual growth).

• Sector Contributions: The largest contributors to growth in H1-2016 were 'Finance and insurance services', 'transport, storage and communications', and 'electricity and water'. In contrast, 'mining and quarrying' and 'imputed bank service charge' were drags on growth. Tourism and construction sectors showed mixed results, with tourist arrivals and receipts lagging behind 2015 levels and construction indicators showing a contraction in the first seven months of 2016.

• Unemployment: Unemployment reached a historical high of 15.9% in Q3-2016, with over one-third of youth unemployed. The government introduced an 8-point plan to address unemployment, including funding for youth entrepreneurial projects.

• Fiscal Policy: The fiscal deficit improved by 33% in 8M-2016, driven by new measures. However, the debt-to-GDP ratio is expected to rise. The government has initiated reforms to improve the efficiency of public services in the energy and water sectors, supported by the World Bank.

• Monetary Policy and Inflation: Monetary policy has remained unchanged since July 2015. CPI contracted by 1.1% in the first nine months of 2016, driven by food and fuel prices. Core inflation, excluding food and fuel, stabilized at 2.0% yoy. Nominal interest rates remained broadly flat.

• Current Account: The current account widened to 12.7% of GDP in H1-2016 due to reduced tourism, remittances, and exports. Jordan's gross international reserves decreased by 11.1% to US$12.6 billion by end-September 2016.

• IMF Program: A three-year US$723 million arrangement under the IMF's Extended Fund Facility was approved in August 2016, aiming to reduce the gross debt-to-GDP ratio to 77% by 2021. It also highlights a structural reform agenda to stimulate growth and unlock grants and concessional financing.

Key Information

Economic Outlook

• Growth is expected to slow for the second year in a row, to 2.3% in 2016 from 2.4% in 2015.
• Downside risks include security incidents, challenges in containing the fiscal deficit, and the potential failure of expected grants and concessional financing.

Policy Reforms

• The Economic Policy Council (EPC) was established in June 2016 to identify measures to stimulate growth, including quick fixes and long-term structural reforms.
• The EPC proposed 38 measures, categorized into nine areas, including startup financing, export and growth financing, capital market reforms, microfinance and insurance, and SME financing.

Sectoral Developments

• Tourism: Tourist arrivals and receipts contracted by 6.8% and 3.4% respectively in Q1-2016 yoy.
• Construction: The sector showed mixed indicators, with a negligible improvement in permits issued and a 5.9% contraction in the area for 7M-2016 yoy.
• Mining and Quarrying: The sector saw a significant slowdown, with a 26.7% contraction in Q2-2016 yoy due to lower international demand and pricing pressures.

Fiscal and Financial Indicators

• The fiscal deficit narrowed by 33% in 8M-2016 yoy, but the debt-to-GDP ratio is expected to increase.
• The trade-in-goods deficit narrowed due to lower energy imports, but domestic exports to Iraq fell by 40.6% in 8M-2016 yoy.
• The Jordan Investment Fund Law was enacted to facilitate investment and improve the business environment.

Special Focus

1. Advancing Human Capital Development in Jordan through Education Sector Reforms

• The education sector has been affected by the Syrian crisis, with an estimated 1.3 million Syrians in Jordan.
• Public education spending has a correlation with GDP per capita, indicating the importance of investment in education.
• The report recommends improving the efficiency of the education sector, enhancing the quality of education, and increasing the number of trained teachers.

2. The Economic Impact of the Arab Spring on Jordan

• The Arab Spring had a negative impact on Jordan's economy, reducing GDP per capita by US$901 in 2015 alone.
• The report suggests policy recommendations to boost recovery, including reforms in the education sector and the implementation of the IMF program.

Conclusion

The Jordan Economic Monitor Fall 2016 highlights the challenges facing the Jordanian economy, including the impact of regional instability, high unemployment, and a widening output gap. It also outlines the government's response through new economic reforms and fiscal measures, aiming to stimulate growth and improve the investment climate. Despite these efforts, the outlook remains cautious due to various risks and uncertainties.