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
  • Contractor wins $218m Aramco-backed logistics hub deal

    7 May 2026

     

    Saudi Amana, the local affiliate of UAE-based construction firm Group Amana, has won an estimated SR820m ($218m) contract to build a logistics complex at King Salman Energy Park (Spark) in Saudi Arabia's Eastern Province.

    Asmo, the logistics joint venture of Saudi Aramco and DHL Supply Chain, awarded the contract.

    Asmo received the main contract bids on 18 March, as MEED reported.

    Al-Khobar-based engineering firm House of Consulting Office is the project consultant.

    In February, Asmo signed an agreement with Bahrain‑headquartered Arcapita Group Holdings to deliver the project at Spark.

    The project will feature a 43,000-square-metre (sq m), temperature-controlled Grade A warehouse; more than 3,000 sq m of offices and staff amenities; 5,300 sq m dedicated to chemicals storage; and an open yard covering about 1.2 million sq m.

    Planned for large-scale industrial use, the site is expected to incorporate advanced warehouse and building management systems, end-to-end digital connectivity, automation and robotics.

    It will also be developed in line with internationally recognised sustainability standards, featuring solar photovoltaic readiness, electric-vehicle charging infrastructure and a target of Leed Gold certification.

    The development aims to support the next stage of Saudi Arabia’s logistics and supply chain expansion.

    Under the deal structure, Arcapita will provide funding and retain ownership of the asset, while Asmo will develop the facility and then lease and operate it under a 22-year occupational lease.

    According to a statement, “the scheme will be executed via a forward-funding model, underscoring a long-term commitment to national infrastructure”.

    Asmo added that this will be its first purpose-built logistics centre and one of four strategic locations planned to anchor its nationwide logistics network, aligned with the National Transport and Logistics Strategy under Saudi Vision 2030.

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

    Global 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:
    To see previous issues of MEED Business Review, please click here

     

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16715420/main.jpg
    Yasir Iqbal
  • Kuwait postpones bid deadlines for four downstream oil tenders

    7 May 2026

     

    Kuwait has extended bid deadlines for four tendered contracts that are all focused on the country’s Mina Al-Ahmadi (MAA) refinery.

    The contracts include a project that has been tendered by state-owned downstream operator Kuwait National Petroleum Company (KNPC) to upgrade water transmission and storage infrastructure at the refinery.

    The contract will use the engineering, procurement and construction model and the tender was originally issued in October 2025 with an initial bid deadline of 4 January 2026.

    The tender has already seen several extensions and the latest rescheduling has set the bid deadline back from 19 April 2026 until 10 May 2026.

    The project is expected to take two years to complete and its scope is focused on expanding water storage capacity at the facility, either through extending existing tanks or building new tanks.

    The winning bidder will also be responsible for developing associated infrastructure and upgrading related systems that transport desalinated water to the refinery, such as pipelines and other infrastructure.

    In its 2024-25 annual report, KNPC said the project will help to meet demand for water at the facility’s refining and gas production units.

    The other three contracts are all maintenance contracts, which were also tendered by KNPC and have had their bid deadlines extended until 30 June 2026.

    The first of these is focused on mechanical maintenance of the Clean Fuel Project (CFP) units at the facility, as well as gas liquid production facilities.

    The CFP units were added to the refinery as part of the $16bn CFP, and were brought online in 2021.

    The project aimed to increase Kuwait’s capacity to produce low-sulfur fuels and, as part of the project, the MAA refinery was integrated with Kuwait’s Mina Abdulla (MAB) refinery.

    The project increased the capacity of MAB to 454,000 barrels a day (b/d) and the MAA refinery to 346,000 b/d.

    The second maintenance contract is focused on the mechanical maintenance of refining and production units at the MAA facility. The third contract is focused on workshop maintenance at the facility.

    The MAA refinery has been hit in several attacks during the US and Israel's war with Iran, which started on 28 February 2026.

    The full extent of the damage to the facility is currently unclear.

    Last month, MEED revealed that state-owned oil companies in Kuwait have fast-tracked the award of contracts to repair damage to infrastructure in the oil and gas sector.

    To expedite the award of contracts, deals were directly negotiated with trusted contractors without public tenders.

    The contracts were negotiated by senior officials at Kuwait Petroleum Corporation subsidiaries including Kuwait Oil Company and KNPC, sources said.

    It is not known whether any of these contracts related to repairs at the MAA refinery.

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

    Global 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:
    To see previous issues of MEED Business Review, please click here

     

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16715383/main.jpg
    Wil Crisp
  • Oman signs exploration agreement for methane hydrates

    7 May 2026

    Oman’s Ministry of Energy & Minerals (MEMR) has signed an agreement with Victarens Global Energy for the exploration of methane hydrates in Block 83 in the sultanate.

    Under the agreement, Victarens Global Energy will perform a study of Block 83, which spans approximately 11,000 square kilometers onshore Oman, over an initial period of two years, extendable for an additional two years based on the outcomes of the studies.

    “This step marks the first initiative of its kind in the sultanate to assess the potential of gas production through non-conventional methods, contributing to the diversification and sustainability of energy sources,” the MEMR said in a statement.

    The agreement was signed in Muscat by Salim Bin Nasser Al-Aufi, Oman’s Energy & Minerals Minister, and Kenan Issa, CEO of Victarens Global Energy.

    The project will be implemented in two main phases. The initial investment for the first phase is estimated at approximately $20m, while the second phase is expected to require around $200m, “reflecting the strategic importance of this project in exploring non-conventional energy resources”, the MEMR said in a statement.

    ALSO READ: Oman awards manganese exploration concession deal

    The scope of work on the first phase includes geological studies, analysis and reprocessing of existing geophysical data, and carrying out new seismic surveys to determine the volume and thickness of methane hydrate layers within the study area.

    Based on the results of this phase, the project will proceed to the second phase, which involves installing extraction equipment and testing the feasibility of commercial production.

    Should the project demonstrate economic viability for methane hydrate production, negotiations will be conducted between the MEMR and the company to establish a long-term agreement, including the commercial terms and profit-sharing mechanisms that ensure mutual benefits for both parties.

    “This agreement aims to explore and assess methane hydrate resources, supporting the adoption of advanced technologies in the energy sector and reinforcing the transition toward future energy sources, while promoting innovation and sustainability in the utilisation of natural resources. The agreement aligns with the objectives of Oman Vision 2040, which focuses on economic diversification, the development of the energy sector and strengthening the sultanate’s position as a regional hub for energy and advanced technologies,” the MEMR statement added.

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

    Global 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:
    To see previous issues of MEED Business Review, please click here

     

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16703851/main1050.jpg
    Indrajit Sen
  • Dubai advances Auto Market construction

    6 May 2026

     

    The construction works on the Dubai Auto Market, which is set to become one of the world’s largest and most advanced automotive trading hubs, are progressing.

    Enabling works are under way, being carried out by local contractor Rad International Road Construction.

    US-based engineering firm Aecom is serving as the project consultant.

    In November last year, Dubai Municipality signed a partnership agreement with DP World’s Economic Zones division to establish and manage the market, as MEED reported. Under the agreement, DP World will provide integrated logistics and zone management services, including e-commerce and trade finance solutions.

    The Dubai Auto Market will span a 22 million-square-foot complex, to be developed by DP World. It is planned to include more than 1,500 showrooms, clustered workshop zones, warehouses and multi-storey parking facilities, alongside a convention centre, hotel, auction house, retail outlets, and food and beverage areas.

    The facility is designed to handle more than 800,000 vehicles a year, including new and used electric, hybrid and conventional models.

    The UAE’s construction industry is projected to expand by 5% in real terms in 2026, supported by rising foreign direct investment (FDI), growth in the construction sector and increased oil sector activity.

    According to the UAE’s Federal Competitiveness and Statistics Centre, construction value added rose by 8.8% year on year (YoY) in Q2 2025, following YoY growth of 7% in Q1 2025 and 10.8% in Q4 2024.

    The commercial construction sector is forecast to grow by 6.4% in 2026 and to record average annual growth of 4.9% from 2027 to 2030, supported by investment in tourism and hotel facilities.

    The industrial construction sector is expected to expand by 4.1% in real terms in 2026, then to average 4.4% annually from 2027 to 2030, supported by improved investment in manufacturing facilities.

    The infrastructure construction sector is projected to grow by 5.8% in real terms in 2026, before averaging 4.3% annual growth from 2027 to 2030, supported by the government’s focus on improving regional connectivity through road and rail development.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16700367/main.png
    Yasir Iqbal
  • Saudi Arabia extends bid deadline for solar projects

    6 May 2026

     

    Saudi Arabia’s principal buyer, Saudi Power Procurement Company (SPPC), has extended the deadline for developers bidding for four solar projects under the seventh round of the National Renewable Energy Programme (NREP).

    Round seven of the NREP comprises solar photovoltaic (PV) and wind independent power producer (IPP) projects with a combined capacity of 5,300MW. The renewables programme is being led and supervised by the Ministry of Energy.

    The four solar PV projects comprise:

    • 1,400MW Tabjal 2 solar PV IPP (Tabrijal, Al-Jouf province)
    • 600MW Mawqqaq solar PV IPP (Mawqqaq, Hail province)
    • 600MW Tathleeth solar PV IPP (Tathleeth, Aseer province)
    • 500MW South Al-Ula solar PV IPP (Al-Ula, Medina province)

    The projects were tendered in January, with an initial bid submission deadline of 30 April.

    The new deadline is 30 June.

    The solar projects are the latest in a string of large-scale power and water developments across the region to have bidding extended in recent weeks.

    In the UAE, the bid deadline for the seventh phase of Dubai Electricity & Water Authority’s Mohammed Bin Rashid Al-Maktoum Solar Park was recently pushed back to 1 July. 

    Bids for the 1,300MW Bilgah and 900MW Shagra wind IPPs are currently still due by 14 May, according to a source.

    In January, MEED reported that 16 developers qualified to bid as both managing and technical members for the four solar PV projects under the seventh round of the NREP.

    These include:

    • Abu Dhabi Future Energy Company (Masdar) 
    • Alfanar Company (Saudi Arabia)
    • Al-Gihaz Holding Company (Saudi Arabia)
    • EDF Power Solutions (France)
    • Kahrabel (Engie) (UAE / France)
    • Sembcorp Utilities (Singapore)
    • Jinko Power (HK) (China)
    • TotalEnergies Renewables (France)
    • Al-Jomaih Energy & Water (Saudi Arabia)
    • Korea Electric Power Corporation (Kepco) (South Korea)
    • Nesma Renewable Energy (Saudi Arabia)
    • Korea Western Power (South Korea)
    • Marubeni Corporation (Japan)
    • SPIC Shanghai Electric Power (China)
    • WahajPeak Holdings (Saudi Arabia)
    • FAS Energy for Trading Company (Saudi Arabia)

    A further six companies qualified to bid as a managing member only for the solar PV projects. These include:

    • Saudi Electricity Company (Saudi Arabia)
    • Grupo Empresarial Enhol (Spain)
    • Power Construction Corporation of China (Power China) (China)
    • GD Power Development (China)
    • Gulf Development Public Company (Thailand)
    • Reliance NU Energies Private (India)

    The renewable energy programme aims to supply 50% of the kingdom’s electricity from renewable energy by 2030.

    Earlier rounds under the NREP have already put in place large capacities. Last October, SPPC awarded contracts to develop and operate five renewable energy projects under round six of the NREP.

    These comprise four solar PV IPP projects and one wind IPP project with a total combined capacity of 4,500MW.

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

    Global 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:
    To see previous issues of MEED Business Review, please click here

     

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16700361/main.jpg
    Mark Dowdall