| COUNTRY PERSPECTIVES
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JORDAN |
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Country presentation |
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Located at the junction of Asia, Europe and Africa, Jordan is bordered by Syria to the north, Iraq to the northeast, Saudi Arabia to the east and south, and Israel and the Israeli administered West Bank Area C to the west. It shares the Dead Sea coastline with Israel and the Gulf of Aqaba with Israel, Saudi Arabia, and Egypt. |
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Introduction |
A small, middle-income country, Jordan plays a pivotal role in supporting stability and security in the Middle East.
Its open economy has to reconcile limited natural resources. Only 6 percent of the country is arable land and water resources are among the scarcest in the world. However, there are sizeable mining resources, primarily potash and phosphates, of which it is the third largest world exporter.
Jordan was heavily impacted by the war in Iraq, disruption of trade with Iraq (its main export market) having not only important economic consequences for the economy but also having an adverse impact on prospects for development. Moreover, tensions in the region contributed to a significant drop in foreign investor interest in Jordan, in addition to marked deterioration of income from tourism.
After a spectacular GDP growth of 7.7 percent in 2004 (up from 4 percent in 2003) largely due to a surge in domestic demand, Jordan’s economic situation worsened in 2005 because of higher world oil prices and an unexpected drop in external grants (down from US$ 1.3 billion in 2004 to US$ 700 million in 2005). These external shocks contributed to a higher budget deficit (up by about 10 percent) and inflation rate (up from 3.4 to 5 percent). The external current account deficit has also deteriorated, largely because of a wider trade deficit; partially offset by private capital inflows and transfers from Jordanians living abroad. However, despite these shocks, real GDP growth came to 7.2 percent in 2005 according to the World Bank, reflecting the economy’s dynamic activity.
The leading sector is services, which account for 70 percent of GDP and the role it plays in supporting production is underlined in the King’s new economic guidelines. While the agricultural and construction sectors account for only a small portion of GDP, they employ a significant percentage of the workforce. The main manufacturing industries are textiles, mining (potash and phosphates), fertilisers, pharmaceuticals, oil refining, and cement. |
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Challenges |
Scarce natural resources and reliance on foreign energy sources are some of the most important challenges that faces Jordan. The agriculture sector suffers from a shortage of water and available land.
The geopolitics of the country, at the centre of the Middle East, makes it vulnerable to the perceptions about events in the region.
Unemployment remains an economic burden that has not been helped by the fall in tourism receipts due to the Intifada and the events in neighbouring Iraq. |
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Strong points |
The human element remains Jordan’s source of national pride. The country enjoys an educated, highly competitive, young and skilled labour force of 1.4 million. In a turbulent region political, legal and social stability remain priceless assets to the Kingdom.
The international trade agreements mentioned above are witness to Jordan’s business friendly and secure environments and have been a major source for attracting billions of dollars in foreign direct investments. |
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References |
| Capital |
Amman |
| Surface area |
89,210 km2 |
| Population |
5,800,000 inhabitants |
| Languages |
Arabic, English |
| GNP (dollars) |
US$ 12.8 bn (2005) |
| GNP per capita (dollars) |
US$ 2,219 (US$ 4,825 en ppp.) in 2005 |
| Currency |
Jordanian Dinar (JOD)
1 Euro = 0,95 JOD – 1 US$ = 0,71 JOD |
| Religion |
Sunnite Muslims (92 %), Christians (6 %), others (2 %) |
| Association Agreement with EU |
Signed on 4/10/1997; implemented on 1/05/2002
EU web site:
http://www.deljor.cec.eu.int |
| WTO membership |
Member since April 2000 |
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Source: IMF, WDI 2006 and Article IV Consultations 2005. |
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