World Bank report expects the Jordanian economy to grow by 2.1% in 2022
Al - Anbat - NEVEEN - AL - JARRAH
The Center for Strategic Studies at the University of Jordan, in partnership with the World Bank, launched the Spring 2022 edition of the Jordan Economic Monitor report today, which was issued by the World Bank under the title "Global turmoil limits recovery and job creation.”
The report stated that the Jordanian economy is expected to grow by 2.1% in 2022, but high commodity prices, supply chain bottlenecks and the impact of the war in Ukraine all pose significant negative risks to the country's economic outlook.
Commenting on this forecast, the Director of the Center for Strategic Studies, Dr. Zaid Eyadat, said that it depends on the relatively strong growth rate of 2.2% recorded in 2021 thanks to the supportive monetary and fiscal policies that the government resorted to, in addition to the gradual reopening of economic activities.
However, Eyadat added that unemployment, particularly among youth and women, remains at alarming levels, and reforms are needed to stimulate investment in order to create more and better jobs.
Eyadat also indicated, according to this issue of the report, that economic growth in Jordan in 2021 was strong, thanks to the significant expansion of the service and industry sectors, and the strong and unexpected recovery in the travel and tourism sector. It relies on direct interaction with the public to a high degree, such as restaurants and hotels, still stumbling from the levels recorded before the pandemic.
According to the report, the Jordanian government has resumed the path of fiscal consolidation, supported by this strong growth in its tax and non-tax revenues. This has also allowed the government to significantly increase capital expenditures in 2021; This is a welcome development given the crucial role of investment in reviving economic activity and increasing employment rates.
Despite the unfavorable changes in world commodity prices and the gradual rise in inflation, consumer prices remained relatively low compared to other countries in the region.
However, according to the report, the recent economic recovery has not led to high job creation. Although the recovery in the service sector helped ease some labor market pressures, the overall unemployment rate in Jordan reached about 23% at the end of 2021, compared to the pre-pandemic level of 19% at the end of 2019.
The report concludes that the high levels of unemployment and employment in the informal sector in Jordan are mainly due to the limited capacity of the private sector to create more and better jobs, as small, low-productivity firms dominate the economy.
Commenting on this, Saroj Kumar Jah, Regional Director of the Mashreq Department at the World Bank, said: "Despite the economic recovery that Jordan has witnessed, the urgent social and economic challenges, including high unemployment rates, especially among youth and women, are still entrenched, and going forward, the acceleration of the implementation of reforms will be Supporting investment is crucial to injecting dynamism into the economy and revitalizing the private sector as one of the main drivers of job creation in the country.”
The Jordan Economic Monitor makes four recommendations to encourage investment and enhance the country's ability to better manage times of uncertainty: 1) intensifying microeconomic reforms to encourage private sector development; 2) implementing reforms aimed at addressing unemployment, especially among youth and women; 3) a shift to a post-crisis macroeconomic policy framework that ensures adequate and reassuring signals are given to investors regarding the investment climate and prices; 4) Renewing Jordan's debt financing strategy to maintain public investments in infrastructure and develop the country's human capital.
The report devotes a special chapter entitled "Creating More and Better Jobs in Jordan" in which it reviews the main structural challenges in the Jordanian labor market, in addition to the necessary reforms required to overcome them.
The report shows that the Corona pandemic has reduced job opportunities available to young people, who constitute about one fifth of the total working-age population in Jordan.
As of the end of 2021, official statistics indicated that more than half of the country's youth were unemployed, with a higher proportion among young female workers.
A striking gender divide still characterizes the Jordanian labor market, with female labor force participation rates 40 percentage points lower than males, making it among the lowest in the world.
"Several factors contribute to the high female unemployment rate, including unfavorable workplace conditions for the family, limited financial inclusion for women, and a lack of access to reliable public transportation,” said Saadia Refkat, the World Bank’s chief economist and author of the report. In addition to prevailing social norms, more economic opportunities for females can be created by lifting these constraints, such as removing legal restrictions on access to jobs, expanding access to quality child care, and increasing women’s financial inclusion.”
The report provides a summary of recommendations to remove obstacles to the dynamism of the private sector in Jordan and create more and better jobs through reforms that increase competition in markets, reduce barriers to access, and upgrade the infrastructure that supports businesses.
The report also stressed the need for these policies to be accompanied by additional efforts to improve the skills of the workforce, address the mismatch of those skills with the requirements of the labor market, and give priority to the requirements of the twenty-first century in terms of advanced skills and competencies.