While I’m sorting out my life I’ll be featuring some guest posts. The following is a guest post.
In common with many Middle Eastern countries, 2012 was a tough year for Jordan. This year could be equally as difficult, affected in part by the civil war raging in neighbouring Syria, fuel and food price rises, and simmering tensions following elections earlier this year.
But there’s room for optimism, too, with dire predictions towards the end of last year of major unrest following a cut in fuel subsidies, which led to some of the increased prices, failing to spark any major country-wide protests.
It’s a positive outcome for Jordan’s expatriates as they try hard to earn a living and enjoy spending just a little of their hard-earned wages. Many of them will no doubt be doing the sensible thing, piling a little of the monthly salary into high interest savings accounts with HSBC or some other big bank in order to maximise their income. It’s always a wise move to put away as much as you can for some future rainy day, especially with many countries in the Middle East experiencing the chill winds of change and uncertainty as political opposition threatens to grow.
Foreign investors are well aware of the situation and of course react by reducing investment levels and adopting a wait-and-see approach as events continue to unfold. Despite recent negativity, however, the omens appear to be looking good at the moment with the IMF expecting Jordan’s growth to have reached 3% by the end of 2012, increasing to 3.5% during 2013, and then rising to 4.5% by 2017. Of course, a lot can happen between now and then which can easily mean predictions will have to be completely revised. There are so many imponderables. Only time will tell.
Given the difficulties under which the economy has laboured during 2012, a 3% rise in GDP should be considered an excellent result, says the Oxford Business Group (OBG), a global leader in business intelligence.
According to the OBG report, Jordan: Year in Review 2012, inflation in 2013 could rise as the impact of higher fuel costs kick in. In mid-November, the government cut subsidies on fuel, an IMF-mandated measure to allow Jordan to qualify for assistance worth $2 billion.
The step was also taken to help narrow the expected budget deficit, which Prime Minister Abdullah Ensour said could potentially expand to $5 billion by the end of 2013. However, in late November the budgetary shortfall was estimated at around $3 billion, equivalent to 11% of GDP – still far above the projected $1.7 billion.
The report adds, “The cost of subsidies rose sharply during the year after gas supplies from Egypt were disrupted because of sabotage to the pipeline linking the two countries. The severing of one of Jordan’s main energy supply routes necessitated a search for alternative sources. The supply cut also led the Kingdom to purchase oil, which is more expensive than gas, thus pushing up costs.
“The announcement of the cut in subsidies sparked a series of protests, as had proposals to end price support earlier in 2012. The government has acknowledged the cut will cause hardships for some, and as a result, is introducing an assistance package that will provide direct payments to low-income earners.” The full report is well worth reading. So check it out here.