meed-logo

line1 line2 line3
SIGN IN / REGISTER

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.  

https://image.digitalinsightresearch.in/uploads/NewsArticle/10921043/main.gif
James Gavin

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Local firm executing Yasref tail gas treatment project

    14 April 2026

     

    Yanbu Aramco Sinopec Refining Company (Yasref) is overseeing progress on a key project to build a tail gas treatment unit (TGTU) at its crude refinery complex, located in Yanbu on the west coast of Saudi Arabia.

    Yasref is a joint venture in which Saudi Aramco owns the majority 62.5% stake and China Petroleum & Chemical Corporation (Sinopec) owns the other 37.5%. The Yasref refinery was commissioned in 2015 and has a crude oil refining capacity of 400,000 barrels a day (b/d).

    The aim of the project, which Yasref calls the tail gas synergy project, is to significantly reduce emissions of sulphur dioxide (SO₂) and hydrogen sulphide (H₂S) from its production complex. The 'synergy' comes from integrating primary treatment (such as the Claus process, which typically recovers about 95-97% of sulphur) with advanced secondary treatment in a TGTU, to achieve overall sulphur recovery of nearly 99.9%.

    Yasref awarded the main contract for the tail gas synergy project to Jeddah-based contractor Carlo Gavazzi Arabia earlier this year, according to information obtained by MEED Projects, with the contract estimated at $80m.

    The local branch of London-headquartered Berkeley Engineering Consultants is acting as the project’s main consultant, according to MEED Projects.

    The scope of work on Yasref’s tail gas synergy project includes the following:

    • Construction of downstream TGTU with catalytic hydrogenation reactor and amine absorber train
    • Modification of existing sulphur recovery units
    • Construction of acid gas removal units employing amine solvent systems
    • Construction of desulphurisation units including carbonyl sulphide hydrolysis
    • Construction of associated utilities and auxiliary infrastructure: thermal exchangers, power and steam supplies, flare knockout drums
    • Installation of safety and security systems hydrogen sulphide detection, overpressure relief, firewater deluge, access control, safety instrumented systems
    • Integration of emission monitoring and process control instrumentation.

    In April last year, Aramco, Sinopec and Yasref signed a venture framework agreement for a potential petrochemicals expansion of the Yasref refinery complex into a major integrated petrochemicals facility. The project would include a large-scale mixed-feed steam cracker with a capacity of 1.8 million tonnes a year (t/y) and a 1.5 million-t/y aromatics complex, along with associated downstream derivatives.

    MEED understands that the Yasref petrochemicals expansion project, which is also referred to as Yasref+, is part of Aramco’s $100bn liquids-to-chemicals programme.

    The central ambition of the strategic programme is to derive greater economic value from every barrel of crude produced in Saudi Arabia by converting 4 million b/d of Aramco’s oil production into high-value petrochemicals and chemicals feedstocks by 2030.

    ALSO READ: Saudi downstream projects market enters lean period
    https://image.digitalinsightresearch.in/uploads/NewsArticle/16383830/main3043.jpg
    Indrajit Sen
  • Kuwait sets April deadline for $718m drainage tender

    14 April 2026

    Kuwait’s Ministry of Public Works has set a 21 April deadline for a major tender estimated to be worth about KD222m ($718m).

    The tender scope covers the construction of rainwater drainage networks across the residential areas of Sabah Al-Ahmad, South Sabah Al-Ahmad, Al-Khairan and Al-Wafra.

    The Ministry of Public Works floated the tender on 22 March.

    According to regional projects tracker MEED Projects, the works include the construction of a major concrete sewer, three collection basins and extensive stormwater drainage basins.

    Rainwater collection tanks will be connected through an independent network, with outlets to the sea via the Nuwaiseeb exit to manage overflow.

    The infrastructure will also filter pollutants such as oils, minerals and sediments to protect water quality and support environmental sustainability.

    The project aims to reduce surface runoff, prevent street and urban flooding, and improve groundwater recharge.

    UK analytics firm GlobalData expects Kuwait’s construction industry to grow by 5.1% in 2026-29, supported by government investment in the oil and gas sector aimed at raising production, as well as investment in the infrastructure sector.

    In the short term, growth will be boosted by planned expenditure under the 2025-26 budget, which was approved in March 2025.

    The construction industry in Kuwait is expected to record an annual average growth rate of 4.9% in 2026-29, supported by investments in renewable energy, transport, and oil and gas projects.

    READ THE APRIL 2026 MEED BUSINESS REVIEW – click here to view PDF

    Economic shock threatens long-term outlook; Riyadh adjusts to fiscal and geopolitical risk; GCC contractor ranking reflects gigaprojects slowdown.

    Distributed to senior decision-makers in the region and around the world, the April 2026 edition of MEED Business Review includes:

    > GCC CONTRACTOR RANKING: Construction guard undergoes a shift
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/16383203/main.jpg
    Yasir Iqbal
  • Local firm makes hydrocarbon discovery in Oman’s Block 7

    14 April 2026

    Omani oil and gas exploration and production company Masar Petroleum has announced a discovery in the Hasirah Ridge in the sultanate’s Block 7.

    Masar Petroleum was the inaugural operator to appraise and produce hydrocarbons from the Hasirah reservoir in Block 7 in 2017.

    Building on that experience, Masar Petroleum has now successfully drilled a new exploration well south of its existing discoveries, validating the concept of the Hasirah Ridge — a geological trend 5 kilometres wide and 30km long mapped across Block 7 using 2D seismic data.

    This discovery represents the first step towards unlocking the Ridge’s prospective resource base of 100 million to 380 million barrels, Masar Petroleum said in a statement.

    Following this discovery, a planned 3D seismic survey and exploration and appraisal programme is expected to advance the development of the new resources by the end of 2028.

    First production from this field is expected to come on stream during the last quarter of this year.

    Masar Petroleum plans to rapidly advance appraisal and development opportunities across Block 7.

    “Masar is a proud Omani E&P company that has delivered significant value through a continuous and focused effort on unlocking our potential,” Abdulsattar AlMurshidi, CEO of Masar Petroleum, said.

    ALSO READ: Oman offers five hydrocarbon exploration blocks in new bidding round
    https://image.digitalinsightresearch.in/uploads/NewsArticle/16383075/main2121.jpg
    Indrajit Sen
  • Bidders get more time for Saudi water transmission projects

    14 April 2026

     

    Saudi Arabia’s Water Transmission Company (WTCO) has extended the bid submission deadlines for engineering, procurement and construction (EPC) contracts for two major independent water transmission system projects.

    The Jubail-Buraidah and Ras Mohaisen-Baha-Mecca transmission projects were first tendered last September under the public-private partnership model.

    The deadlines for qualified contractors to submit technical and financial bids had initially been extended to March. 

    The new bid submission deadline for the Jubail-Buraidah project is 30 April.

    Scheduled to begin construction in 2027, the scheme comprises an approximately 348-kilometre-long greenfield water transmission system with a capacity of 840,650 cubic metres a day (cm/d), delivering water from the Ashmasiah reservoirs to cities and towns in Al-Qassim province.

    The project is large by WTCO standards. The company’s second phase of the Khobar-Hofuf system, completed in 2024, was 140km in length, with a capacity exceeding 530,000 cm/d. 

    Ras Mohaisen-Baha-Mecca

    For the Ras Mohaisen-Baha-Mecca water transmission system project, the new bid submission deadline is 7 May.

    The project involves constructing an approximately 325km-long greenfield independent water transmission system with a capacity of 542,000 cm/d, delivering water from Ras Mohaisen to the Adham and Aradhiyah regions.

    Prequalification for both projects closed on 15 January.

    It is understood that local firms Alkhorayef Water & Power Technologies and Mutlaq Al-Ghowairi Contracting Company (MGC) are among those qualified to bid for the Ras Mohaisen contract.

    MGC secured the EPC contract for an even larger independent water transmission pipeline project in June last year.

    The project, also linking Jubail and Buraidah, spans 587km and carries 650,000 cm/d.

    According to regional project tracker MEED Projects, construction works recently commenced on the project, which is estimated to cost about SR8.5bn ($2.2bn).

    WTCO is also planning to tender a contract for phase two of the Ras Mohaisen water transmission system project. This includes laying water transmission pipelines 408km in length with a capacity of 400,000 cm/d. This project is estimated to cost around $600m.

    It is understood that the main contract tender will be issued in 2027.

    READ THE APRIL 2026 MEED BUSINESS REVIEW – click here to view PDF

    Economic shock threatens long-term outlook; Riyadh adjusts to fiscal and geopolitical risk; GCC contractor ranking reflects gigaprojects slowdown.

    Distributed to senior decision-makers in the region and around the world, the April 2026 edition of MEED Business Review includes:

    > GCC CONTRACTOR RANKING: Construction guard undergoes a shift
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/16383056/main.jpg
    Mark Dowdall
  • Saudi firm wins $64.2m steel pipe orders from Aramco

    14 April 2026

    Saudi Arabia-based Arabian Pipes Company has announced it has won orders from Saudi Aramco to supply steel pipes, totalling SR241m ($64.2m).

    Under the terms of the contracts, Arabian Pipes Company will supply steel pipes over contract durations of nine months and 11 months, commencing from the date of signing.

    “These contract awards reinforce Arabian Pipes Company’s strong position as a key supplier to the kingdom’s energy sector and highlight its continued commitment to supporting major oil and gas infrastructure projects in Saudi Arabia,” the company said in a filing with the Saudi Exchange (Tadawul), where its shares trade.

    The company added that the orders will contribute positively to its financial performance over the contract period.

    Arabian Pipes Company last secured a contract from Aramco in August 2024, when it won an eleven-month steel pipe supply order worth approximately $28.53m.

    Prior to that, in July 2024, the company won a contract worth SR293m ($78.1m) to supply steel pipes for the second expansion phase of Aramco’s Jafurah unconventional gas development. That contract had a duration of 10 months.

    The order was placed as a subcontract by Denys Arabia, the main contractor performing engineering, procurement and construction works on one of the Jafurah second expansion phase project packages.

    MEED’s April 2026 report on Saudi Arabia includes:

    > COMMENT: Risk accelerates Saudi spending shift
    > GVT &: ECONOMY: Riyadh navigates a changed landscape
    > BANKING: Testing times for Saudi banks
    > UPSTREAM: Offshore oil and gas projects to dominate Aramco capex in 2026
    > DOWNSTREAM: Saudi downstream projects market enters lean period
    > POWER: Wind power gathers pace in Saudi Arabia
    > WATER: Sharakat plan signals next phase of Saudi water expansion
    > CONSTRUCTION: Saudi construction enters a period of strategic readjustment
    > TRANSPORT: Rail expansion powers Saudi Arabia’s infrastructure push

    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/16382513/main2830.jpg
    Indrajit Sen