Jordan is showing continued resilience in the face of external shocks, but growth recovery is yet to reflect on labor market outcomes.
AMMAN, December 19, 2023 – Jordan's economic trajectory continues to showcase resilience in the face of persistent global and domestic challenges. Economic growth reached 2.7 percent in the first half of 2023, driven by a robust growth in services and a recovery in agriculture. Yet, structural constraints continue to weigh on labor market outcomes, and the decline in labor force participation persists for both men and women. In particular, the female labor force participation rate in Jordan is less than 14 percent, one of the lowest in the world. Under its Engendered Strategy for the Economic Modernization Vision 2033 and National Strategy for Women 2020-2025, Jordan is advancing important reforms aimed at doubling women’s labor force participation over the next decade.
The World Bank’s latest edition of the Jordan Economic Monitor (JEM) Fall 2023 titled: “Building Success, Breaking Barriers: Unlocking the Economic Power of Women in Jordan”, provides an update of recent economic developments and examines the Kingdom’s economic outlook. The Special Focus Chapter of the JEM sheds light on the pivotal role of women in Jordan's development agenda, taking a life cycle approach to understand their journey from birth through education and into the labor market. The report examines key constraints to women's economic participation and highlights the need for a comprehensive strategy that includes expanding access and quality of childcare and enhancing public transportation coverage, affordability, and safety.
"A holistic, multi-sectoral approach to facilitate women’s entry and retention in the labor market is essential", said Jean-Christophe Carret, World Bank Mashreq Country Director. "This includes an enabling legal and policy environment, investing in education and market-driven skills, improving access to quality childcare and a safe transport system, expanding access to finance and entrepreneurship, and addressing norms and attitudes toward women in the workforce. The World Bank is committed to supporting Jordan’s efforts to unlock women’s economic potential in alignment with the Economic Modernization Vision 2033."
On economic trends highlighted in the JEM, a significant deceleration in annual headline inflation in 2023, the sustained recovery in travel receipts and lower global commodity prices have all contributed to redressing fiscal and external imbalances. Monetary policy remains prudent as the Central Bank of Jordan continues its monetary policy tightening, positioning Jordan among the few countries in the region with positive real policy rates.
Furthermore, fiscal consolidation continues to build on growing domestic revenues, leading to an overall narrowing of the fiscal deficit and a small surplus in the primary balance during the first seven months of 2023. Nevertheless, Jordan’s debt-to-GDP ratio continues to rise from an already elevated level, reaching 111.4 percent of GDP in 2022 (88.8 percent of GDP net of the Social Security Investment Fund (SSIF) holdings), with persistent pressures from the electricity and water sectors.
“Jordan has prudently navigated difficult times, but entrenched structural constraints continue to weigh on the economy.” said Hoda Youssef, World Bank Senior Country Economist. “Generating employment remains Jordan’s major challenge, as economic growth is yet to translate into job creation, notably in high-productivity sectors. Putting public debt on a downward trajectory will be necessary to ensure long-term fiscal sustainability and create a favorable economic environment for future generations.”
Going forward, growth is expected to reach 2.6 percent in 2023. The current account and fiscal deficits are expected to narrow to 6.6 percent and 5.2 percent, respectively, while inflation is estimated to decelerate to around 2.4 percent. The global environment remains challenging, with tight monetary conditions and decelerating growth in Jordan's main trading partners expected to persist in 2023. The conflict and geopolitical tensions in the region are taking a toll on risk sentiment, and may trigger disruptions in trade flows, tourism activity (and other larger sectors through backward and forward linkages), volatility in energy markets and a subsequent impact on consumption and the cost of production.
As Jordan continues to navigate a difficult economic landscape and continued shocks, a steady focus on unlocking women's economic potential emerges as critical to Jordan’s long-term growth and development pathway.
