ECONOMY
Jordan is a small country with limited natural resources. It is among the four most water-poor countries in the world. The country is currently exploring ways to expand its limited water supply and use its existing water resources more efficiently, including through regional cooperation. Jordan also depends on external sources for the majority of its energy requirements. During the 1990s, its crude petroleum needs were met through imports from neighboring Iraq, often at concessionary prices. Since early 2003, Jordan has imported oil primarily from Saudi Arabia at concessionary and market prices. In addition, a natural gas pipeline from Egypt to Jordan through the southern port city of Aqaba is now operational. The pipeline has reached northern Jordan and construction to connect it to Syria and beyond is underway. Jordan developed a new energy strategy in 2007 that aims to develop more indigenous and renewable energy sources, including oil shale, nuclear energy, wind, and solar power.
Under King Abdullah, Jordan has undertaken a program of economic reform. The government has taken the initiative for the phased elimination of fuel subsidies, passed legislation targeting corruption, and begun tax reform. It has also worked to liberalize trade, joining the World Trade Organization (WTO) in 2000, signing an Association Agreement with the European Union (EU) in 2001, and signing the first bilateral Free Trade Agreement (FTA) between the U.S. and an Arab country in 2001 (www.jordanusfta.com). The U.S.-Jordan FTA will phase out duties on nearly all goods and services by 2010. The agreement also provides for more open markets in communications, construction, finance, health, transportation, and services, as well as strict application of international standards for the protection of intellectual property. In 1996, the U.S. Congress created Qualifying Industrial Zones (QIZ) to support the peace process. QIZ goods, which must contain a certain percentage of Israeli input and enter the United States tariff- and quota-free, have also driven economic growth, particularly in the export of light manufactured products such as garments. Jordan exported $6.9 million in goods to the U.S. in 1997, when two-way trade was $395 million; according to the U.S. International Trade Commission, it exported $1.33 billion in 2007, with two-way trade at $2.19 billion. In 2007, Jordan's economy continued to grow but was hurt by high oil prices, leading to an unexpectedly high budget deficit. Fuel subsidies were eliminated in 2008, and barley subsidies are scheduled to be replaced by a program that offsets livestock rather than feed costs.
In 1996, Jordan and the United States signed a civil aviation agreement that provides for "open skies" between the two countries, and a U.S.-Jordan Bilateral Investment Treaty (BIT) for the protection and encouragement of bilateral investment entered into force in 2003. The United States and Jordan also signed in 2007 a Science and Technology Cooperation Agreement to facilitate and strengthen scientific cooperation between the two countries, as well as a memorandum of understanding on nuclear energy cooperation. Such agreements bolster efforts to help diversify Jordan's economy and promote growth, and at the same time lessen reliance on exports of phosphates, potash, and recently textiles; overseas remittances; and foreign aid. The government has emphasized the information technology (IT) and tourism sectors as other promising growth sectors. The low tax and low regulation Aqaba Special Economic Zone (ASEZ) is considered a model of a government-provided framework for private sector-led economic growth.
Jordan is classified by the World Bank as a "lower middle income country." The per capita GDP is $4,700. According to Jordan's Department of Statistics, 13% of the economically active Jordanian population residing in Jordan was unemployed in 2007, although unofficial estimates cite a 30% unemployment rate. Education and literacy rates and measures of social well-being are relatively high compared to other countries with similar incomes. Jordan's population growth rate has declined in recent years and is currently 2.3% as reported by the Jordanian government. One of the most important factors in the government's efforts to improve the well-being of its citizens is the macroeconomic stability that has been achieved since the 1990s. The rate of inflation in 2007 was 5.7%; the currency has been stable with an exchange rate fixed to the U.S. dollar since 1995 at JD 0.708-0.710 to the dollar. In 2007, Jordan negotiated a Paris Club debt buyback agreement to retire at least $2 billion. This buyback will reduce the percentage of external debt to GDP from 46% to 32%.
While pursuing economic reform and increased trade, Jordan's economy will continue to be vulnerable to external shocks and regional unrest. Without calm in the region, economic growth seems destined to stay below its potential.
Nominal GDP (2007): $13.55 billion.
Annual real growth rate (2007): 5.7%.
Per capita GDP (2007): $4,700.
Natural resources: Phosphate, potash.
Agriculture: Products--citrus, tomatoes, cucumbers, olives, sheep, poultry, stone fruits, strawberries, melons, dairy. Land--10% arable; 5% cultivated.
Industry (26.5% of GDP in 2006): Types--clothing, phosphate mining, fertilizers, pharmaceuticals, petroleum refining, cement, potash, inorganic chemicals, light manufacturing, and tourism.
Trade: Exports (2007 est.)--$5.708 billion: garments, pharmaceutical products, fertilizers, vegetables, phosphates, and potash. Major markets--U.S., Iraq, India, Saudi Arabia, U.A.E., Syria, Israel, Kuwait. Imports (2007 est.)--$13.5 billion: crude petroleum and derivatives, fabrics and textiles, machinery and equipment, manufactured goods, iron, and cereals. Major suppliers-- Saudi Arabia (mainly crude oil and derivatives), EU, China, U.S., Egypt, South Korea, Japan, Turkey.
