Since taking over the reins of power in February, King Abdullah of Jordan has taken a series of importantpolitical decisions which will have far reaching effects for the Hashemite kingdom. However, one of the new monarch's most vital tasks is to inject some life into his country's floundering economy
Jordan entered a new and challenging era under King Abdullah II and nine months down the line, the political and economic work ahead remains formidable. The new King inherited a sluggish economy, with an official unemployment rate of 25 per cent, among the highest in the Middle East, as well as a per capita income which has been declining since 1996. Prime Minister Abdul Raouf Rawabdeh warned that Jordan "had passed from a period of slow growth to a period of recession".
The new King recognises the social implications of unemployment and has admitted he has had "very little time to improve the country's economic woes".
Jordan enjoyed a robust GDP growth during the first half of the 1990s, averaging 6.5 per cent annually, fuelled by surging private consumption and investment activity, largely as a result of capital injections made by 300,000 Jordanian expatriates returning from the Gulf countries in the wake of the Iraqi invasion of Kuwait.
But from the second half of the decade, the economy has slipped into stagnation. Real GDP grew by only 1.5 per cent between 1996 and 1998, falling below annual population growth of 3.5 per cent. Independent estimates put GDP growth last year at zero and real per capita growth in 1999 will again be negative, as the population growth will exceed any expansion in the economy. Official figures put growth at a modest two per cent for 1999, largely fuelled by fixed investments in minerals and infrastructural projects, but growth in private consumption has remained subdued.
The government blames the economic downturn on a reduction in export revenue, because of the continued UN trade embargo on Iraq, Jordan's main trading partner. Higher interest rates, a decline in the construction industry and the continuing lack of a peace dividend under the government of former Israeli Prime Minister Binyamin Netanyahu have also undermined growth prospects. Painfully slow progress towards implementation of the Oslo, and later, the Wye Accords between Israel and the Palestinians has so far hindered Jordanian trade with the West Bank and Gaza strip.
Despite attempts to implement structural reforms since the early 1990s, Jordan remains a fragile economy, sustained by international aid and workers' remittances (which totalled $2 billion in 1997 according to the World Bank). The Kingdom has yet to achieve sustainable growth and development.
According to the Export & Finance Bank of Jordan...