Jordan economy holds a steady course
7 June 2023
MEED's July 2023 report on Jordan also includes:
> OIL & GAS: Jordan's oil and gas sector battles sluggish phase
> POWER & WATER: Jordan sustains utility infrastructure progress
> CONSTRUCTION: Hospital boost for Jordan construction
With attention absorbed by the royal wedding of Jordan's Crown Prince Hussein bin Abdullah and Saudi architect Rajwa al-Saif in early June, the release of unemployment figures for the first quarter of 2023 showing joblessness at almost 22 per cent suggested it might have been a good day to bury bad news.
Stubbornly high unemployment is only one challenge facing the Hashemite Kingdom. Rising costs have also roused demonstrations. Last December, professional drivers took to the streets to protest against fuel price rises, a side effect of the imposition of IMF-backed fuel subsidy reforms that resulted in a doubling of prices.
And yet, broader inflationary pressures have been mitigated by significant strategic wheat reserves and long-term gas supply arrangements. The country’s dollar peg has also limited foreign exchange volatility.
Inflation still poses a significant risk, say analysts. “Jordan has been largely shielded from the high inflationary pressures affecting the world. However, the country inevitably faced higher prices as both food and fuel supplies have been affected by Russia’s war on Ukraine,” says Farah el-Rafei, Jordan economist at consultancy Oxford Economics.
“If inflation spikes again, this could put significant pressure on the government, given stagnant wages and high unemployment.”
Institutional acclaim
The government’s economic management has won plaudits from the IMF and ratings agencies. The IMF’s most recent assessment issued in May found that despite a challenging global and regional environment, Jordan has managed to maintain macroeconomic stability and access to international capital markets through prudent monetary and fiscal policies.
The fund lauded the kingdom’s post-pandemic recovery, projecting real GDP growth rise to 2.7 per cent in 2023, and inflation for the year to moderate to 3.8 per cent.
This has afforded space to tackle the country’s indebtedness, with ambitions to reduce public debt to 80 per cent of GDP by 2028, from around 90 per cent now. This will be achieved by continued efforts to broaden the tax base, and by improving the efficiency of public spending.
“The country has made solid progress in implementing the structural reforms suggested by the IMF,” notes El-Rafei.
“Activity has increased via higher tourism and export revenues carried over from 2022, and this momentum is likely to be maintained in 2023.”
If inflation spikes again, this could put significant pressure on the government, given stagnant wages and high unemployment
Farah el-Rafei, Oxford Economics
Persisting difficulties
Despite Jordan’s cushioning against inflation, particularly with food stocks, there is an expectation that rises in prices in the region will inevitably catch up on growth efforts this year.
Another risk stems from the dollar peg, where higher interest rates raise the cost of borrowing.
“While the US Federal Reserve announced a potential end to the rate hikes, leaving the rates as high as they are for an extended period might suffocate investment in Jordan,” says El-Rafei.
Jordan’s external deficit remains high, reflecting the country’s high import burden. The current account deficit widened to 7 per cent of GDP in the first half of 2022. This external deficit is expected to persist in the short term as global inflation stabilises and regional exports and investments pick up.
Though the IMF recommends continuing the prudent policies that have preserved macroeconomic stability, the government may find it increasingly difficult to increase tax revenues and change the composition of tax revenues.
According to Nesreen Barakat, CEO of the Jordan Strategy Forum, total tax revenues are still hovering around 15 to 17 per cent of GDP, and most of these revenues (about 70 per cent) emanate from the country’s sales tax.
“Broadening the tax base is proving difficult,” she says. “In addition, I wonder how the government can improve the efficiency of public spending when a few spending items, such as wages, pensions and interest payments on public debt, account for a large proportion of total public spending.”
Restrategising growth
Another challenge for Jordan is that merely sustaining the post-pandemic recovery may not be enough.
In Barakat’s view, given the unemployment challenge, much stronger real GDP growth rates are needed. “Here, I am not confident that the Jordanian economy can achieve higher growth rates in the next few years,” she says.
“If we succeed in implementing the Economic Modernisation Vision’s initiative and public sector reform, we might have a good chance in the long term. Within this context, one cannot underestimate the importance of enhancing and increasing local investments as well as foreign direct investment.”
The Economic Modernisation Vision calls for the private sector to take the lead, accounting for 73 per cent of the total $58.8bn in investment.
The three-phase vision aims to increase average real income per capita by 3 per cent annually, create 1 million jobs and more than double the nation’s GDP over 10 years.
For the vision to be realised, a large pipeline of public-private partnership (PPP) schemes is needed, covering water desalination, school construction, clean energy, green hydrogen, transport improvement and road construction, among others.
Barakat says the government should not just focus on 'large' PPP projects. “The private sector cannot get involved in large and long-term PPP projects,” she says.
“The absence of an active bond market in its primary and secondary aspects makes it impossible for them (entrepreneurs as well as banks) to get involved. I see the private sector getting involved in 'small' PPP projects. This is where the government should be instrumental in determining these projects and seeking private sector partnerships.”
Green opportunities
Another new avenue of thinking is a greater interest in climate spending.
Last year saw the launch of the government’s Green Economy Financing Facility (GEFF), supported by the European Bank for Reconstruction & Development, the Green Climate Fund and the EU, to help Jordan transition to a green economy.
Some $22m of funding via three GEFF deals has been disbursed to boost private sector investment in renewable energy and efficient utilisation of water and energy resources. The International Finance Corporation has also announced a $50m investment issued by the Jordan Kuwait Bank.
“This is particularly significant as Jordan is considered among the most vulnerable to drought due to climate change, which remains a high risk due to capacity shortages,” says El-Rafei.
Such long-term strategising will be key to developing Jordan’s economic potential. But in the meantime, there are near-term hurdles to navigate amid a challenging international context that is forcing higher borrowing costs. The danger remains that this could choke investment opportunities that are essential to Jordan’s recovery.
Register for MEED's guest program now to access this article.
Exclusive from Meed
-
Oman seeks adviser for gas-fired IPPs15 May 2026
-
-
-
-
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
-
Oman seeks adviser for gas-fired IPPs
15 May 2026
Oman’s Nama Power & Water Procurement Company (PWP) has issued a request for proposals for technical consultancy services for the development of new gas-fired independent power projects (IPPs) in the sultanate.
The state offtaker said the projects will have a total capacity of up to 2,800MW.
The bid submission deadline is 17 June.
While Oman is accelerating investment in renewable energy and battery storage, gas-fired thermal generation is expected to remain a core part of the country’s power mix over the coming decade.
The Misfah and Duqm combined-cycle gas turbine power plants are advancing towards construction following the appointment of China-headquartered Shandong Electric Power Construction No. 3 Company (Sepco 3) and South Korea’s Doosan Enerbility as contractors.
According to Nama PWP’s 2025 annual report, the Duqm IPP will have a total capacity of 877MW, including 555MW of early power capacity, which is scheduled to commence in Q2 2028.
The Misfah IPP will have a total capacity of 1,700MW, including 1,203MW of early power capacity, which is scheduled to commence in the same quarter.
Nama PWP has also recently awarded new power-purchase agreements (PPAs) to three IPPs to extend the operating life of existing gas-fired power plants beyond the expiry of their current contracts.
The new agreements for the 750MW Sohar 2 IPP and 750MW Barka 3 IPP will take effect on 1 April 2028 and run until 31 March 2043. The agreement for the 200MW Sur IPP will commence on 1 April 2029 and run until 31 March 2044.
The awards form part of Nama PWP’s 2028-29 procurement programme. The programme aims to secure firm generation capacity from existing assets whose current PPAs are due to expire during that period.
https://image.digitalinsightresearch.in/uploads/NewsArticle/16857037/main4750.jpg -
Alghanim submits lowest offer for Kuwait oil refinery project
15 May 2026
Kuwait’s Alghanim International General Trading & Contracting has submitted the lowest bid for a contract to upgrade the country’s Mina Al-Ahmadi (MAA) refinery.
The client is state-owned downstream operator Kuwait National Petroleum Company (KNPC). The project scope covers upgrades to water transmission and storage infrastructure at the refinery.
The contract will be delivered under an engineering, procurement and construction (EPC) model. The tender was issued in October 2025 with an initial bid deadline of 4 January 2026, which was later extended several times. The most recent rescheduling moved the deadline from 19 April to 10 May.
Alghanim submitted a bid of KD37.0m ($120m), significantly lower than the other two bidders, both Kuwait-based: Heavy Engineering Industries & Shipbuilding Company (Heisco) at KD60.6m ($197m) and Gulf Spic General Trading & Contracting at KD63.9m ($207m).
The project is expected to take two years to complete and will expand water storage capacity at the facility by extending existing tanks or constructing new ones. The contractor will also develop associated infrastructure and upgrade systems that transport desalinated water to the refinery, including pipelines and related equipment.
In its 2024-25 annual report, KNPC said the project will help meet water demand for the facility’s refining and gas production units.
https://image.digitalinsightresearch.in/uploads/NewsArticle/16852744/main.jpg -
Civil and piping work starts on Iraq field development
15 May 2026
Civil works and piping work have started for the project to develop a second central processing facility (CPF) at Iraq’s Ratawi oil and gas field, according to industry sources.
The project is part of the $27bn Gas Growth Integrated Project (GGIP), which is being developed by TotalEnergies along with its partners Basra Oil Company (BOC) and Qatar Energy.
Phase one of the GGIP is expected to be worth about $10bn.
Work is progressing on the project despite logistical problems related to the regional conflict that broke out after the US and Israel attacked Iran on 28 February.
While early works are ongoing, equipment needed for later stages of the project is being delayed as it was due to be transported to the project site using ships that would have travelled through the Strait of Hormuz.
Shipping through the Strait is still severely disrupted due to the regional conflict.
In September, Turkiye’s Enka signed a contract to develop the second CPF at Iraq’s Ratawi field as part of the second phase of the field’s development.
Enka did not give a value for the contract, but it is believed to be worth more than $1bn.
In November, US-based KBR was selected by Enka to provide detailed design services for the project.
Enka’s contract covers the engineering, procurement, supply, construction and commissioning of the CPF for the project known as the Associated Gas Upstream Project Phase 2 (AGUP2).
The aim of the AGUP2 project is to process oil and associated gas from the Ratawi oil field to increase production capacity to 210,000 barrels a day of oil and 154 million standard cubic feet a day of gas.
GGIP masterplan
The GGIP programme is being led by TotalEnergies, the operator, which holds a 45% stake.
Basra Oil Company and QatarEnergy hold 30% and 25% stakes, respectively. The consortium formalised the investment agreement with the Iraqi government in September 2021.
The four projects that comprise the GGIP are:
- The Common Seawater Supply Project (CSSP)
- The Ratawi gas processing complex
- A 1GW solar power project for Iraq’s electricity ministry
- A field development project at Ratawi, known as the Associated Gas Upstream Project (AGUP)
The CSSP is designed to support oil production in Iraq’s southern oil and gas fields – mainly Zubair, Rumaila, Majnoon, West Qurna and Ratawi – by delivering treated seawater for injection, a method used to boost crude recovery rates and improve long-term reservoir performance.
China Petroleum Engineering & Construction Corporation (CPECC) won a $1.61bn contract in May to execute EPC work for the gas processing complex at the Ratawi field development.
CPECC’s project team based in its Dubai office is performing detailed engineering work on the project.
In August last year, TotalEnergies awarded China Energy Engineering International Group the engineering, procurement and construction (EPC) contract for the 1GW solar project at the Ratawi field. A month later, QatarEnergy signed an agreement with TotalEnergies to acquire a 50% interest in the project.
The 1GW Ratawi solar scheme will be developed in phases, with each phase coming online between 2025 and 2027. It will have the capacity to provide electricity to about 350,000 homes in Iraq’s Basra region.
The project, consisting of 2 million bifacial solar panels mounted on single-axis trackers, will include the design, procurement, construction and commissioning of the photovoltaic power station site and 132kV booster station.
Separately, in June, TotalEnergies awarded China Petroleum Pipeline Engineering an EPC contract worth $294m to build a pipeline as part of a package known as the Ratawi Gas Midstream Pipeline.
Also, TotalEnergies awarded UK-based consultant Wood Group a pair of engineering framework agreements in April, worth a combined $11m, under the GGIP scheme.
The agreements have a three-year term under which Wood will support TotalEnergies in advancing the AGUP.
One of the aims of the AGUP is to debottleneck and upgrade existing facilities to increase production capacity to 120,000 b/d of oil on completion of the first phase, according to a statement by Wood.
READ THE MAY 2026 MEED BUSINESS REVIEW – click here to view PDFGlobal energy sector forced to recalibrate; Conflict hits debt issuance and listings activity; UAE’s non-oil sector faces unclear recovery period amid disruption.
Distributed to senior decision-makers in the region and around the world, the May 2026 edition of MEED Business Review includes:
> REGIONAL LNG: War undermines business case for Middle East LNG> CAPITAL MARKETS: Damage avoidance frames debt issuance> MARKET FOCUS: Conflict tests UAE diversificationTo see previous issues of MEED Business Review, please click herehttps://image.digitalinsightresearch.in/uploads/NewsArticle/16852654/main.png -
Abu Dhabi selects Yas Island site for $1.7bn Sphere venue
14 May 2026
Abu Dhabi’s Department of Culture & Tourism (DCT Abu Dhabi) and US-based Sphere Entertainment have selected Yas Island as the location for the $1.7bn Sphere Abu Dhabi project.
The venue will be built on a plot between Yas Mall and SeaWorld Abu Dhabi, close to Yas Island’s theme parks and attractions. Construction is expected to be completed by the end of 2029. Dubai-listed Alec is understood to be the selected contractor and has been working on the project’s pre-construction phase.
The project will be the first Sphere venue outside the US. It is expected to echo the scale of Sphere Las Vegas, with a capacity of up to 20,000 depending on configuration.
DCT Abu Dhabi said it will coordinate enabling and infrastructure works with Abu Dhabi entities, including the Department of Municipalities & Transport and its Integrated Transport Centre, the Department of Energy, Taqa, Etihad Rail and Aldar. The scope includes road enhancements, site access and site-wide infrastructure integrated with surrounding Yas Island assets.
Sphere Abu Dhabi is the latest addition to Abu Dhabi’s integrated tourism and destination-development pipeline on Yas Island, alongside major attractions and the Disney theme park resort that was announced in 2025.
DCT and Sphere Entertainment finalised an agreement last year related to the construction, development and operation of the Sphere entertainment venue in Abu Dhabi. According to the agreement, Sphere Entertainment granted DCT the exclusive rights to build and operate the Sphere Abu Dhabi entertainment venue.
https://image.digitalinsightresearch.in/uploads/NewsArticle/16837302/main.gif -
Consortiums prepare bids for Al-Khairan phase one IWPP
14 May 2026
Two developer consortiums are finalising bids for the first phase of Kuwait’s Al-Khairan independent water and power producer (IWPP) project, the deadline for which has been extended to 1 June.
The facility will have a capacity of 1,800MW and 150,000 cubic metres a day of desalinated water. It will be located in Al-Khairan, adjacent to the Al-Zour South thermal plant.
The project is expected to run on Low Sulphur Fuel Oil (LSFO) as the primary fuel and to accommodate crude oil, gas oil, and natural gas as backup fuels. Later phases will further expand capacity.
The main contract was tendered last September. Three consortiums and two individual companies were previously prequalified to participate, with the following groups currently preparing offers:
- Abu Dhabi National Energy Company (Taqa) / A H Al-Sagar & Brothers (Saudi Arabia)
- Acwa (Saudi Arabia) / Gulf Investment Corporation (Kuwait)
The two individual companies, Sumitomo Corporation (Japan) and Nebras Power (Qatar), are now “unlikely” to submit a bid, according to a source close to the project.
It is also understood that the third consortium of China Power, Malakoff International (Malaysia) and Abdul Aziz Al-Ajlan Sons (Saudi Arabia) is no longer bidding for the contract.
The project is being procured by the Kuwait Authority for Partnership Projects (Kapp) and the Ministry of Electricity, Water & Renewable Energy (MEWRE).
The Al-Khairan IWPP project is part of Kuwait’s long-term plan to expand power and water production capacity through public-private partnerships (PPPs).
The winning bidder will sign a set of PPP agreements covering financing, design, construction, operation and transfer of the project.
The energy conversion and water purchase agreement is expected to cover a 25-year supply period.
Upcoming awards
Kuwait is also preparing to offer a contract to develop zone one of the third phase of the Al-Dibdibah power and Al-Shagaya renewable energy project.
In January, three consortiums submitted bids for a contract to develop Kuwait’s first utility-scale solar photovoltaic (PV) plant.
The Al-Dibdibah power and Al-Shagaya renewable energy phase three, zone one independent power project (IPP) will have a total power-generating capacity of 1,100MW.
MEED understands that the preferred bidder announcement will happen after the bid closes for zone two of the third phase of the Al-Dibdibah power and Al-Shagaya renewable energy project.
The PPP authority is procuring the 500MW solar photovoltaic IPP in partnership with the ministry.
The bid deadline for this project was recently extended to 31 May.
https://image.digitalinsightresearch.in/uploads/NewsArticle/16835649/main.jpg