Jordan policymakers walk tightrope
4 June 2024
Few countries will envy Jordan right now, as one of the Israel-Palestine-adjacent countries most severely impacted both economically and politically by the inevitable spillover of the war in Gaza.
Economic growth in Jordan has inevitably been hit by the conflict, especially in the country’s trade and tourism sectors. Domestic opposition to the war has meanwhile left Ammann walking a tightrope – opposing Israel while remaining part of a broad regional Western-backed coalition that saw Jordan play its part in stemming missile attacks launched by Iran at Israel in April.
The Gaza war is only one of a number of pitfalls confronting the government, which currently faces an unemployment rate of about 22%, desperate water scarcity, and the presence of 1.3 million Syrian refugees topping up the country’s existing population of refugees from Iraq, Palestine and elsewhere.
In these invidious circumstances, the country has performed well, but has also suffered negative consequences.
“Jordan has preserved economic and political stability despite significant external shocks, including social instability in the region (Arab Spring) and wars in neighbouring countries (Iraq and Syria), but these shocks have led to lower growth and significant government debt build-up,” says Erich Arispe, a senior director in Fitch Ratings’ sovereigns group.
For now, Jordan appears to be carrying off the delicate diplomatic work in relation to Israel. It is playing a critical role in the aid effort to Gaza, distancing itself from its neighbour by withdrawing its ambassador from Tel Aviv, and mothballing a planned water-for-energy project.
But it has so far resisted pressure from domestic protesters to adopt a more assertive stance towards Israel – not least since the government is wary of putting its relationship with the US under stress and threatening the $1.45bn in annual aid it receives from Washington.
Jordan’s reliance on Israeli water supplies will also play a part in Amman’s calculus. The kingdom typically sources around 80% of its natural gas from Israel’s offshore Leviathan field.
Despite deep antipathy to Israeli Prime Minister Benjamin Netanyahu’s government, the reality is that Jordan is locked into a cooperative relationship with its neighbour, including through the Hashemite dynasty’s custodianship of the Al-Aqsa mosque compound in Jerusalem.
Economic effects
While Jordan is unlikely to take radical steps to change its relationship with its neighbour, it remains deeply impacted by Israel’s actions, with the economic implications of the conflict in Gaza being felt nationwide.
The Jordan Hotel Association reported that about half of its hotel reservations were cancelled in October 2023. Fitch Ratings expects that lower tourism inflows, weaker external demand and continued regional political uncertainty will slow growth to 2.3% in 2024, from 2.6% in 2023.
“Nevertheless, we expect that the decline in US and European tourists will be partly compensated by resilience in Jordanian expats and regional tourists. Before the start of the Gaza conflict, Jordanian expats and Arab and GCC tourists accounted for almost three-quarters of total visitors,” says Arispe.
Although the IMF warned in May that the continuation of the war and the trade route disruptions in the Red Sea are affecting sentiment, trade and tourism, barring a significant escalation, the Jordanian economy should be able to navigate the challenges.
While Jordan is primed to run a large current account deficit, at a projected 6.4% of GDP in 2024, this is still lower than the 6.8% deficit recorded in 2023.
According to Fitch, the general government deficit will ease to 2.6% in 2024 and 2.4% in 2025, as expenditure restraint will balance lower-than-budgeted revenue growth and higher interest payments.
“One of the main economic challenges for policymakers is to lift growth prospects to support a sustainable reduction in government debt,” says Arispe.
In its May rating affirmation, Fitch estimated that general government debt (consolidating central government debt holdings of the Social Security Investment Fund and including the Water Authority of Jordan debt and NEPCO guaranteed debt) rose to 93.3% of GDP at the end of 2023.
Although it forecast debt will decline to 91.3% by 2025, this will remain significantly above the projected 53.6% median for sovereigns rated ‘BB’.
“Jordan’s fiscal strategy aims to lower debt to 80% of GDP by 2028 based on a combination of revenue increases, through measures directed at broadening the tax base, and expenditure restraint,” says Arispe.
“Nevertheless, Fitch considers that the sustainability of the current fiscal strategy will depend on the success of reforms aimed at lifting growth prospects combined with increased employment.”
External support
For all the Hashemite kingdom’s vulnerability to regional conflicts, its strategic position also carries advantages. Jordan has attracted substantial external support in the past year, drawing on its status as a regional source of stability.
Early in 2024, the IMF began a new four-year, $1.2bn Extended Fund Facility (EFF).
“From a broader perspective, one of Jordan’s strengths in terms of creditworthiness is the strong relations with multilateral organisations and allies, including the US and partners in the region, which supports Jordan’s financing flexibility. The sovereign is projected to receive total foreign assistance of $3.5bn (6.5% of projected GDP) in 2024,” says Arispe.
In addition, Jordan is attracting significant Gulf investment. In late May, the country’s Investment Ministry announced that Abu Dhabi Development Holding Company (ADQ) had completed the establishment of an infrastructure investment fund company in Jordan. This deal was first mooted during King Abdullah’s visit to Abu Dhabi in 2023.
This company will invest in infrastructure and development projects worth $5bn.
The government also remains committed to its reform agenda, for example, by gradually increasing water utility tariffs last year.
“We expect, though, that the pace of reform progress will continue to depend on the objective of preserving social stability, the resistance of vested interests and institutional capacity constraints,” says Arispe.
Reducing high unemployment is a government priority, especially among women and younger people.
The government is moving ahead with the first phase of its ambitious Economic Modernisation Vision 2023-33, which aims to increase growth potential (5%) and create 1 million jobs over the next decade through higher private investment in strategic sectors.
“The authorities have made progress in terms of digitisation of government procedures, most notably those related to investment, and public administration reform,” says Arispe.
“Nevertheless, increased geopolitical risks make it harder for the government to achieve the 2025 targets under the Vision’s 2023-25 first phase, including reaching 3% growth and exports reaching $13.7bn.”
Above all, the government will hope that external events will not yet have a negative bearing on an ambitious political reform programme that is invariably contingent on favourable regional relations.
Register for MEED's guest program now to access this article.
Exclusive from Meed
All of this is only 1% of what MEED.com has to offer
Subscribe now and unlock all the 153,671 articles on MEED.com
- All the latest news, data, and market intelligence across MENA at your fingerprints
- First-hand updates and inside information on projects, clients and competitors that matter to you
- 20 years' archive of information, data, and news for you to access at your convenience
- Strategize to succeed and minimise risks with timely analysis of current and future market trends
Related Articles
-
Qatar seeks to establish new industrial area in Mesaieed16 July 2026
Qatar’s Ministry of Commerce & Industry and state enterprise QatarEnergy have signed an agreement to cooperate on evaluating and allocating hydrocarbon-derived resources to support the establishment of a new medium industries area in Mesaieed Industrial City.
Under the terms of reference signed between the parties, QatarEnergy will implement a governance mechanism for the allocation of hydrocarbon-derived feedstock to qualifying industrial investment opportunities for the proposed new medium industries area in Mesaieed Industrial City.
“The agreed terms of reference stipulate the evaluation and allocation of hydrocarbon-derived resources, natural gas, power and related natural resources to downstream derivative industrial investment opportunities,” QatarEnergy said in a statement.
“It will also ensure the optimal use of national resources and enhance the added value of the industrial sector by establishing a joint governance framework to evaluate and allocate resources required by qualified industrial investment opportunities,” it added.
QatarEnergy currently operates crude oil refining facilities, including natural gas liquids units, as well as petrochemical production complexes and other units in the hydrocarbon value chain, in Mesaieed Industrial City, situated around 45 kilometres south of Doha.
https://image.digitalinsightresearch.in/uploads/NewsArticle/17688383/main.jpg -
Bahri signs deal for two offshore vessels with Dubai shipyard16 July 2026
Bahri Logistics, a division of Saudi Arabia’s national shipping company Bahri, has placed an order for the construction of two advanced offshore support vessels with Dubai-based Grandweld Shipyard.
Grandweld will custom-build the two vessels to meet Bahri’s operational requirements for offshore activities at Ras Tanura port in Saudi Arabia, one of the world’s busiest oil and gas bunkering and export hubs.
The vessels will be built at Grandweld’s shipyard in Dubai Maritime City and are expected to be delivered in August, following a 12-month building period.
The vessels will feature the latest navigation and safety technologies. They are designed to perform multiple offshore support functions, including vessel clearance, crew changes and emergency response, while adhering to international maritime standards.
The newbuild agreement with Grandweld aligns with Bahri’s broader strategy “to modernise its fleet, enhance technical capabilities, and adopt more energy-efficient and environmentally responsible designs”.
“Through continued investments in technology, infrastructure and fleet diversification, Bahri Logistics aims to deliver smarter, more sustainable logistics solutions that contribute to the Saudi Green Initiative and the kingdom’s long-term economic diversification goals,” the Saudi Stock Exchange-listed (Tadawul) company said in a statement.
https://image.digitalinsightresearch.in/uploads/NewsArticle/17687877/main.jpg -
Egypt intensifies efforts to create petroleum stockpile16 July 2026
Egypt is intensifying its efforts to secure and maintain a sufficient strategic stockpile of petroleum products, according to a statement from the country’s cabinet and its Ministry of Petroleum & Mineral Resources.
The Egyptian government is closely monitoring regional developments and their potential repercussions on the energy sector, according to the statement.
Egyptian Prime Minister Mostafa Madbouly said that the government is implementing flexible plans and looking at alternative scenarios so that it can respond quickly to emergencies while ensuring the uninterrupted supply of fuel to citizens and key industrial sectors.
Egypt is intensifying its efforts to build up strategic stockpiles amid heightened uncertainty about future global oil and gas supplies.
Since the US and Israel attacked Iran on 28 February, there has been significant disruption to shipping through the Strait of Hormuz, which is a key transit route for oil and gas exports from the Middle East.
On top of this, the regional war has involved multiple direct attacks on refineries in the GCC, increasing uncertainty about the future availability of refined products.
Aside from Motafa Madbouly, the meeting was also attended by Hassan Abdullah, who is governor of the Central Bank, Minister of Finance Ahmed Koguk and Minister of Petroleum and Minerals Karim Badawi.
During the meeting, Badawi gave a presentation on the available quantities of different petroleum products and explained the details of the procedures currently being implemented to increase the strategic stock of petroleum products.
A review of the coordination framework and joint work between the Ministry of Finance and the Central Bank also took place during the meeting.
This was in order to ensure the management of financial tools needed to strengthen the country’s strategic inventory, according to the statement.
https://image.digitalinsightresearch.in/uploads/NewsArticle/17685719/main.jpg -
Tunisia orders $86m of trainsets from Chinese supplier16 July 2026
Tunisian public transport operator Transtu has finalised an $86m agreement with China’s CRRC Nanjing Puzhen.
CRRC will supply 18 new electric trainsets for the capital’s northern suburban rail network, which links Tunis to La Goulette and La Marsa.
Each new trainset will be air-conditioned and capable of carrying up to 400 passengers, including 90 seated riders, with a top speed of 100 km/h. Once operational, the trains are expected to run at six-minute intervals during rush hour and every 12 minutes during off-peak hours.
The deal forms part of a broader fleet renewal effort by Transtu, which has struggled in recent years with operational setbacks that have taken a toll on the quality of public transport across Greater Tunis.
The acquisition is designed to boost capacity on the heavily used line as ridership continues to grow, while also enhancing safety standards and overall service quality.
Funding for the project comes jointly from the European Bank for Reconstruction & Development and the European Investment Bank.
Beyond the trainsets, the contract includes five years of maintenance coverage, a supply of spare parts and maintenance equipment, and an underfloor wheel lathe aimed at improving long-term fleet reliability.
This latest investment fits into Tunisia’s larger railway modernisation strategy, under which the government plans to invest $12bn by 2040 to expand and upgrade the country’s rail infrastructure.
https://image.digitalinsightresearch.in/uploads/NewsArticle/17683957/main.jpg -
PIF developer tenders 365-metre Mecca residential tower16 July 2026
Rua Al-Haram Al-Makki has tendered the main construction package for the Ajyad residential tower, a 365-metre high-rise development in Mecca’s central area, close to the grand mosque.
The bid submission deadline is 30 September.
Rua Al-Haram Al-Makki Company was established in October 2017 and is a wholly owned subsidiary of Saudi Arabia’s Public Investment Fund.
The project team includes US-based Marriott International as residential operator, Hanmi Global Saudi as project management consultant, Saudi Diyar Consultants as construction supervision consultant, and PLP Architecture as lead design consultant and construction-stage design guardian.
The tower rises 84 floors with four basement levels. It comprises a total of 212 units, including 82 three-bedroom apartments, 85 four-bedroom units, 29 penthouses and 16 duplex villas.
The scheme has a gross floor area of 209,231 square metres (sq m) and a built-up area of 242,976 sq m.
The site is currently being cleared by a demolition contractor, with the existing mat foundation and retaining walls to be handed over to the main contractor, who will build the new superstructure on the retained raft.
https://image.digitalinsightresearch.in/uploads/NewsArticle/17683664/main.jpg