JORDAN ECONOMIC MONITOR TOWARDS STRONGER EXTERNAL TRADE PERFORMANCE Fall 2017 Global Practice for Macroeconomics, Trade & investment MIDDLE EAST AND NORTH AFRICA REGION The World Bank JORDAN ECONOMIC MONITOR | TOWARDS STRONGER EXTERNAL TRADE PERFORMANCE PREFACE The Jordan Economic Monitor provides an update To be included on an email distribution list for on key economic developments and policies over this Jordan Economic Monitor series and related the past six months. It also presents findings from publications, please contact Nada Abou Rizk recent World Bank work on Jordan. It places them (nabourizk@worldbank.org). For questions and in a longer-term and global context, and assesses comments on the content of this publication, please the implications of these developments and other contact Wissam Harake (wharake@worldbank.org) changes in policy on the country’s outlook. Its or Christos Kostopoulos (ckostopoulos@worldbank. coverage ranges from the macro-economy to org). Questions from the media can be addressed to financial markets to indicators of human welfare Zeina El Khalil (zelkhalil@worldbank.org). and development. It is intended for a wide audience, including policy makers, business leaders, financial market participants, and the community of analysts and professionals engaged in Jordan. The Jordan Economic Monitor is a product of the World Bank’s Global Practice for Macroeconomics, Trade, and Investment team. It was prepared by Wissam Harake (Senior Economist) and Zeina Hasna (Economic Analyst), under the general guidance of Christos Kostopoulos (Lead Economist) and Kevin Carey (Practice Manager). The Special Focus ‘Quantifying Diversification Strategies for Jordan’ was prepared by Emiliano Duch (Lead Private Sector Specialist), Meriem Ait Ali Slimane (Private Sector Specialist) and Anoud Allouzi (Private Sector Development Consultant); World Bank. Zeina El Khalil (Communications Officer) led on media outreach and print production and Naji Abou Hamde (Economic Analyst) provided Arabic translation. The findings, interpretations, and conclusions expressed in this Monitor are those of World Bank staff and do not necessarily reflect the views of the Executive Board of the World Bank or the governments they represent. For information about the World Bank and its activities in Jordan, including e-copies of this publication, please visit www.worldbank.org.jo. Preface | 1 THE WORLD BANK TABLE OF CONTENTS PREFACE........................................................................................................................................................ 1 EXECUTIVE SUMMARY ............................................................................................................................... 4 …ò«ØæàdG ¢üî∏ªdG .............................................................................................................................................. 7 RECENT ECONOMIC AND POLICY DEVELOPMENTS ........................................................................... 8 Output and Demand ....................................................................................................................................... 8 Labor and Employment ................................................................................................................................. 15 Fiscal Policy................................................................................................................................................... 16 External Position............................................................................................................................................ 17 Monetary Policy and Finance ........................................................................................................................ 18 PROSPECTS ................................................................................................................................................ 22 SPECIAL FOCUS ......................................................................................................................................... 24 Analysis of Export Diversification Strategies ................................................................................................ 24 Context ......................................................................................................................................................... 24 Diversification and Upgrading Rapid Assessment ......................................................................................... 25 Methodology................................................................................................................................................. 25 Industrial Sectors and Apparel....................................................................................................................... 25 Agricultural Sector......................................................................................................................................... 26 Results .......................................................................................................................................................... 27 Industrial products to the EU ........................................................................................................................ 28 Apparel ......................................................................................................................................................... 29 Agricultural Sector......................................................................................................................................... 29 Conclusions and Limitations ......................................................................................................................... 30 DATA APPENDIX ........................................................................................................................................ 32 SELECTED RECENT WORLD BANK PUBLICATIONS ON JORDAN .................................................... 33 LIST OF FIGURES FIGURE 1. Since 2010, Jordan experienced low-growth equilibrium…......................................................... 9 FIGURE 2. … despite a relatively high investment ratio… ............................................................................ 9 FIGURE 3. …as suggested by a higher ICOR… ............................................................................................. 9 FIGURE 4. … and tradeoffs in human capital priorities................................................................................. 9 FIGURE 5. …Growth slowed down by construction and the public sector but helped by … ..................... 10 FIGURE 6. … a robust tourism sector … .................................................................................................... 10 FIGURE 7. Domestic exports to GCC are deteriorating .............................................................................. 11 FIGURE 8. …across a range of products ..................................................................................................... 11 FIGURE 9. Tourist receipts from GCC are sluggish…... .............................................................................. 12 FIGURE 10. …while FDI and remittances deteriorate . ................................................................................. 12 FIGURE 11. … and a recovering mining and quarrying sector ...................................................................... 13 FIGURE 12. Net exports and private demand drive growth from the demand side ...................................... 13 FIGURE 13. Gender-based heterogeneity in main labor market indicators amplified with new methodolog 15 FIGURE 14. Fiscal deficit widens in 10M-2017… ......................................................................................... 16 FIGURE 15. … and gross debt-to-GDP ratio stabilizes.................................................................................. 16 FIGURE 16. A disappointing performance for trade to be followed by an expected recovery….................... 18 FIGURE 17. … as exports to major trade partners projected to pick up........................................................ 18 FIGURE 18. Current account deficit narrows… ............................................................................................ 18 FIGURE 19. Inflation hovers in positive territory after a two-year deflation .................................................. 19 FIGURE 20. Exchange market pressure driven by foreign inflows ................................................................ 19 2 | Table of Contents JORDAN ECONOMIC MONITOR | TOWARDS STRONGER EXTERNAL TRADE PERFORMANCE FIGURE 21. Real interest rates picking up since January 2017 ..................................................................... 19 FIGURE 22. ...yet commercial bank lending to private sectors grows .......................................................... 19 FIGURE 23. Dollarization rate levels ............................................................................................................. 20 FIGURE 24. A decline in foreign reserves at the Central Bank induced by a confluence of factors ............... 20 FIGURE 25. Stock exchange recovers then declines since end-2016 ............................................................ 20 FIGURE 26. Credit to the private sector largely unvaried in 2017 ................................................................ 20 FIGURE 27. Approach to Comparative Analysis for Jordan’s Exports and Markets ....................................... 25 FIGURE 28. Comparative Analysis for Specific Industrial Products............................................................... 28 FIGURE 29. Export Potential for Apparels..................................................................................................... 29 FIGURE 30. Export Potential for Produce ..................................................................................................... 30 LIST OF TABLES TABLE 1. Financial Soundness Indicators ................................................................................................. 21 TABLE 2. Empirical Results of the Rapid Assessment ............................................................................... 27 LIST OF BOXES BOX 1. Jordan-GCC Economic Linkages................................................................................................ 11 BOX 2. Jordan’s Country Reclassification to Lower-Middle-Income ...................................................... 14 LIST OF KEY ABBREVIATIONS USED bps: Basis points DURA: Diversification and Upgrading Rapid Assessment DVA: Domestic Value Added EFF: Extended Fund Facility EU: European Union GCC: Gulf Cooperation Council H1, H2: First half of the year, second half of the year IMF: International Monetary Fund lhs, rhs: Left hand side, right hand side (for axis of figures) pp: Percentage points Q1 (Q2, Q3, Q4): First (second, third, fourth) quarter of the year qoq: Quarter-on-quarter sa: Seasonally adjusted saar: Seasonally adjusted, annual rate yoy: Year-on-year Table of Contents | 3 THE WORLD BANK EXECUTIVE SUMMARY i. Jordan’s economic performance remains 2017 (equivalent to 6.6 months of imports, excluding tempered in 2017 while the fiscal adjustment is re-exports). Meanwhile, headline consumer prices in progress; yet there are positive signs on the showed a significant recovery, although largely due to horizon. Real GDP growth for 2017 is expected to low-base effects. reach 2.1 percent, just a 0.1 percentage point (pp) iii. The labor market continues to face high increase from 2016. On the supply side, services unemployment and low participation as the continue to be the principal driver of GDP growth, economy remains in a low growth equilibrium. A and these are propelled by a robust performance new methodology by the Department of Statistics as in tourism. Jordan’s industrial sector is expected to of Q1-2017 revealed that unemployment averaged regain momentum based on a recovery in mining 18.1 percent in the first half of 2017 (H1-2017), while and quarrying as the effect of the drop in potash labor force participation averaged 39.7 percent. Both prices starts dissipating. On the demand side, indicators continue to reflect acute gender-based private consumption and investment in addition heterogeneity and youth marginalization in Jordan’s to net exports of goods and services are projected labor market. to lead GDP growth. The combination of public consumption and public investment are expected iv. With a challenging regional outlook and to be a drag on GDP growth. The reliance of GDP contractionary fiscal and monetary policies in growth on private demand, as opposed to public place, it is difficult to foresee a strong recovery demand, is a welcomed change from growth in GDP growth without continuation of structural patterns since 2014. As a result of the progress in economic reforms. The reopening of trade routes net exports, the current account deficit is projected with Iraq bodes well in improving consumption and to narrow slightly to 8.8 percent of GDP. investment sentiments. However, given that the orientation of the Jordanian economy is outward ii. Jordan’s fiscal and monetary policies are looking and geared to supporting markets in the taking a contractionary stance, though the year end Gulf Cooperation Council (GCC), Syria and Iraq, outcomes are expected to be mixed. On the fiscal the regional downturn will continue to affect the side, despite the restraint complemented by financing economy. Jordan’s long-term macroeconomic from the International Monetary Fund Extended Fund vulnerability stems from sizable internal and external Facility (IMF-EFF), the overall fiscal deficit is expected imbalances that generate large financing needs, to reach 6.4 percent of GDP (excluding grants), owing which are typically met via international assistance. to stagnant performance on the revenue side following In order to ensure financial and economic stability, a weaker than expected economy. On the monetary Jordan needs to deepen its equitable growth and job policy side, the peg to the US$ has led to an increase creation reforms to enhance the efficiency of the in interest rates, tracking the FED. The Central Bank of economy and shift the burden of job creation to the Jordan raised interest rates four times since December private sector. Expanding Jordan’s export revenues 2016 in attempts to maintain the attractiveness of with new partners or higher quality products will the Jordanian Dinar. This was in the context of lower need to be part of that agenda as well. foreign inflows and higher dollarization rates putting downward pressures on central bank foreign reserves which declined to US$11.7 billion by end-October 4 | Executive Summary JORDAN ECONOMIC MONITOR | TOWARDS STRONGER EXTERNAL TRADE PERFORMANCE v. To gauge Jordan’s exporting aptitude, we undertake an assessment that quantifies the potential for expanding the quantity and quality of some specific industrial, apparel and agricultural exports (Special Focus). The most striking result is that investing in the agricultural sector could generate four times the value added of the sector in the economy. Executive Summary | 5 THE WORLD BANK 6 | …ò«ØæàdG ¢üî∏ªdG JORDAN ECONOMIC MONITOR | TOWARDS STRONGER EXTERNAL TRADE PERFORMANCE …ò«ØæàdG ¢üî∏ªdG ,Ék ª¡e Ék °TÉ©àfG á«°ù«FôdG ∂∏¡à°ùŸG QÉ©°SCG äô¡XCG ,¬°ùØf âbƒdG ‘h 2017 ΩÉY ‘ kÉ°†Øîæe ÊOQC’G …OÉ°üàb’G AGOC’G »≤H .i §N q¿CG ¤EG ÒÑc óM ¤EG ™Lôj ¢TÉ©àf’G Gòg ¿CG øe ºZôdG ≈∏Y äGQÉ°TEG qøµd ,áeÉ©dG á«dÉŸG ´É°VhCG í«ë°üJ á«∏ªY π°UGƒJ π q X‘ k °UCG Ék «fóàe ¿Éc ¢SÉ°SC’G .Ó »∏ëŸG œÉædG ƒ‰ π°üj ¿CG ™b q ƒàŸG øeh .≥aC’G ‘ äR n ôH á«HÉéjEG á©ØJôe ádÉ£H ä’ó©e ó¡°ûj πª©dG ¥ƒ°S ∫Gõj ’h .iii 0^1 IOÉjõH …CG ,áFÉŸG ‘ 2^1 ¤EG 2017 ΩÉ©d »≤«≤◊G ‹ÉªLE’G ƒ‰ ¿RGƒJ ∫ÉM ‘ OÉ°üàb’G π¶j å«M ,áØ«©°V ácQÉ°ûeh ∫GõJ ’ ,¢Vô©dG ó«©°U ≈∏Yh .2016 ΩÉ©H á k fQÉ≤e ájƒÄe á£≤f ‘ äGAÉ°üME’G IôFGO É¡JóYCG IójóL á«é¡æe âØ°ûch .¢†Øîæe ,‹ÉªLE’G »∏ëŸG œÉædG ƒªæd »°ù«FôdG ∑ô q ëŸG »g äÉeóÿG ‘ áFÉŸG ‘ 18^1 ≠∏H ádÉ£ÑdG ∫ó©e ¿CG 2017 ΩÉY øe ∫hC’G ™HôdG ´É£≤dG ó«©à°ùj ¿CG ™b q ƒàŸG øeh .áMÉ«°ùdG ´É£≤d …ƒ≤dG AGOC’G ÉgRqõ©j iƒ≤dG ácQÉ°ûe §°Sƒàe ≠∏H ÚM ‘ ,2017 ΩÉY øe ∫hC’G ∞°üædG ∫Ó¨à°SGh øjó©àdG ¢TÉ©àfG Aƒ°V ≈∏Y Ék ªNR ÊOQC’G »YÉæ°üdG ¢ùfÉéàdG ΩóY ¿É°ùµ©j ¿Gô°TDƒŸG ∫Gõj ’h .áFÉŸG ‘ 39^7 á∏eÉ©dG ,Ö∏£dG ó«©°U ≈∏Yh .¢SÉJƒÑdG QÉ©°SCG ¢VÉØîfG ôKCG »°TÓJh ,ôLÉëŸG ‘ πª©dG ¥ƒ°S ‘ ÜÉÑ°ûdG ¢û«ª¡Jh ¢ùæ÷G ´ƒf ≈∏Y ºFÉ≤dG OÉ◊G ¤EG áaÉ°VE’ÉH ¢UÉÿG Qɪãà°S’Gh ∑Ó¡à°S’G …ODƒj ¿CG ™bƒàŸG øe .¿OQC’G »∏ëŸG œÉædG ƒ‰ ∂jô– ¤EG äÉeóÿGh ™∏°ùdG äGQOÉ°U ‘É°U Qɪãà°S’Gh ΩÉ©dG ∑Ó¡à°S’G ôKDƒj ¿CG ™bƒàŸG øe ¬fCG ÒZ .‹ÉªLE’G ájó≤fh á«dÉe äÉ°SÉ«°Sh Ö©°U »ª«∏bEG ó¡°ûe π q X ‘h .iv œÉædG ƒ‰ OɪàYG πãÁh .‹ÉªLE’G »∏ëŸG œÉædG ƒ‰ ≈∏Y Ék Ñ∏°S ΩÉ©dG »∏ëŸG œÉædG ƒ‰ ‘ …ƒb ¢TÉ©àfG ™b q ƒJ Ö©°üdG øe ,á«°TɪµfG Gk Ò«¨J ,ΩÉ©dG Ö∏£dG πHÉ≤e ‘ ,¢UÉÿG Ö∏£dG ≈∏Y ‹ÉªLE’G »∏ëŸG ¿EG .á«∏µ«¡dG ájOÉ°üàb’G äÉMÓ°UE’G á∏°UGƒe ¿hO ‹ÉªLE’G RôëŸG Ωó q ≤à∏d áé«àfh .2014 ΩÉY òæe ƒªædG •É‰CÉH á k fQÉ≤e Gk ó«ªM ¥ÉaBG Ú°ù– √ÉŒÉH ÒÿÉH ô°ûÑj ¥Gô©dG ™e IQÉéàdG ¥ôW íàa IOÉYEG …QÉ÷G ÜÉ°ù◊G õéY ¢†Øîæj ¿CG ™bƒàŸG øe ,äGQOÉ°üdG ‘É°U ‘ q ÊOQC’G OÉ°üàb’G ¿CG ¤EG ô¶ædÉH øµdh .Qɪãà°S’Gh ∑Ó¡à°S’G ¬Lƒe .‹ÉªLE’G »∏ëŸG œÉædG øe áFÉŸG ‘ 8^8 ¤EG »é«∏ÿG ¿hÉ©àdG ¢ù∏› ∫hO ‘ ¥Gƒ°SC’G ºYO ƒëf ,êQÉÿG ƒëf ôKq Dƒj 𶫰S »ª«∏bE’G iƒà°ùŸG ≈∏Y ™LGÎdG ¿EÉa ,¥Gô©dGh ÉjQƒ°Sh ≈ëæe n ¿OQC’G ‘ ájó≤ædGh á«dÉŸG äÉ°SÉ«°ùdG òîà qJ .ii ≈∏Y ÊOQC’G »∏µdG OÉ°üàb’G ∞©°V ™Ñæjh .ÊOQC’G OÉ°üàb’G ≈∏Y ¿ƒµJ ¿CG ™bƒàŸG øe ΩÉ©dG ájÉ¡f èFÉàf ¿CG øe ºZôdG ≈∏Y ,kÉ«°TɪµfG äÉLÉ«àMG ódq ƒJ IÒÑc á«LQÉNh á«∏NGO ä’ÓàNG øe πjƒ£dG ióŸG ìÓ°UE’G èeÉfôH øe ºZôdG ≈∏Y ,‹ÉŸG ó«©°üdG ≈∏Yh .á£∏àfl øeh .á«dhódG äGóYÉ°ùŸG ∫ÓN øe IOÉY É¡à«Ñ∏J ºàj ,IÒÑc á«∏jƒ“ ¥hóæ°üd Oó q ªŸG ÊɪàFE’G π«¡°ùàdG èeÉfôH øe πjƒªàH ܃ë°üŸG ≥«ª©J ¤EG ¿OQC’G êÉàëj ,…OÉ°üàb’Gh ‹ÉŸG QGô≤à°S’G ¿Éª°V πLCG ‘ 6^4 ¤EG ‹ÉªLE’G ‹ÉŸG õé©dG π°üj ¿CG ™b q ƒàj ,‹hódG ó≤ædG πLCG øe πª©dG ¢Uôa ≥∏Nh ∫OÉ©dG ƒªædG ≥«≤– √ÉŒÉH äÉMÓ°U’G OƒcôdG ÖÑ°ùH ,(íæŸG AÉæãà°SÉH) ‹ÉªLE’G »∏ëŸG œÉædG øe áFÉŸG ´É£≤dG ¤EG ∞FÉXƒdG ≥∏N AÖY πjƒ–h OÉ°üàb’G IAÉØc õjõ©J ÉeCG .™bƒàŸG øe ∞©°VCG äAÉL ájOÉ°üàbG èFÉàf ó©H äGOGôjE’G ‘ OóL AÉcô°T ™e á«fOQC’G ôjó°üàdG äGóFÉY ™«°SƒJ q¿EG ɪc .¢UÉÿG …òdG ,‹É◊G …ó≤ædG QÉWE’G iOCG ó≤a ,ájó≤ædG á°SÉ«°ùdG ó«©°U ≈∏Y .≈©°ùŸG Gòg øe Gk AõL ¿ƒµj ¿CG Öéj ≈∏YCG IOƒL äGP äÉéàæe hCG ,IóFÉØdG QÉ©°SCG IOÉjR ¤EG ,»µjôeC’G Q’hódÉH §HôdG ¤EG óæà°ùj …õcôŸG ∂æÑdG ™aQ óbh .»cÒeC’G …õcôŸG ∂æÑdG á°SÉ«°S ™e Ék «°TÉ“ º««≤J AGôLEÉH Ωƒ≤f ,ôjó°üàdG ≈∏Y ¿OQC’G IQób ¢SÉ«≤dh .v ádhÉfi ‘ 2016 Ȫ°ùjO òæe äGôe ™HQCG IóFÉØdG QÉ©°SCG ÊOQC’G á«YÉæ°üdG äGQOÉ°üdG ¢†©H á«Yƒfh ᫪c ™«°SƒJ äÉfɵeEG Oqóëj ¥É«°S ‘ ∂dP AÉL óbh .ÊOQC’G QÉæjódG á«HPÉL ≈∏Y ®ÉØë∏d áé«àædGh .(¢UÉN ôjô≤J) ¢ùHÓŸG äGQOÉ°Uh IOqóëŸG á«YGQõdGh ™°Vh ɇ IôdhódG ä’ó q ©e ´ÉØJQGh á«ÑæLC’G äÉ≤aóàdG ¢VÉØîfG á©HQCG ódq ƒj ¿CG øµÁ »YGQõdG ´É£≤dG ‘ Qɪãà°S’G ¿CG »g RôHC’G â°†ØîfG »àdG …õcôŸG ∂æÑ∏d á«ÑæLC’G äÉ«WÉ«àM’G ≈∏Y Ék Wƒ¨°V .ÊOQC’G OÉ°üàb’G ‘ ´É£≤∏d áaÉ°†ŸG ᪫≤dG ±É©°VCG ∫OÉ©j Ée …CG) 2017 ôHƒàcCG ájÉ¡f ‘ »µjôeCG Q’hO QÉ«∏e 11^7 ¤EG .(Égôjó°üJ OÉ©ŸG äGQOÉ°üdG AÉæãà°SÉH ,äGOQGƒdG øe ô¡°TCG 6^6 …ò«ØæàdG ¢üî∏ªdG | 7 THE WORLD BANK RECENT ECONOMIC AND POLICY DEVELOPMENTS 1. Over the summer 2017, Jordan witnessed for Jordan (total worth of the program is €200 a cabinet re-shuffle followed by Municipal million, and the disbursement of the second tranche Elections, the first-ever decentralized elections. is expected during 2018). The first MFA program In June 2017, a 3rd reshuffle took place in Prime consisted of a €180 million package that was Minister Mulki’s cabinet with new Ministers of Social approved in 2013 and disbursed throughout 2015. Development, Transport and Energy. Following Additionally, the Jordanian Minister of Planning the reshuffle, in August, Jordan held regional and and International Cooperation, Imad Fakhoury, municipality polls, the first of their kind under the visited the United States and discussed renewing Decentralization Law enacted in 2015, electing 12 the memorandum of understanding (MoU) between new governorate/provincial councils. The elections the two countries for 2018-2022. The MoU will constituted a step forward in the country’s political have a twofold objective: governing the economic reform process. As a next step, a well-thought out and and military aid to Jordan, and supporting Jordan’s studied framework for fiscal decentralization needs reform and development projects. to be developed to serve as a foundation for service delivery and accountability. On 19 November 2017, the Cabinet endorsed the 2018 state budget law. 2. On 30 August 2017, Jordan and Iraq Output and Demand reopened their only border crossing, the Karameh- Tureibil border, after a two-year closure forced 4. Jordan’s economy has endured a by elevated security concerns. The long-awaited prolonged period of low economic growth as it reopening of trade routes is expected to revitalize faced a succession of external shocks. In 2010, and bilateral trade, enhance prospects of developing on the back of the 2008-09 Gulf Cooperation Council the oil pipeline from Basra to Amman and Aqaba, (GCC) financial crisis, itself a second-degree ripple and enhance investment sentiments. In addition, of the 2008 global financial crisis, Jordan’s economy the two countries agreed on September 10, 2017 entered into a period of prolonged slowdown. This to establish a joint Jordanian-Iraqi industrial estate slowdown was further extended by the eruption of on the newly reopened border, with customs free the wars first in Syria and then Iraq, both of which access for selected goods. continue to smolder. Regional headwinds involved spillovers on the security front, leading to the closure 3. Support from development partners of trade routes with Iraq and Syria, which were both remains important to the government’s strategic final destinations and transit routes for Jordanian objectives. On June 21, 2017, the International exports. This also includes repercussions from the Monetary Fund completed the first review of the influx of almost 660,0001 Syrian refugees into Jordan, three-year Extended Fund Facility program, enabling in addition to, according to government estimates, the disbursement of about US$71 million (SDR an almost equal amount of non-registered Syrians. 51.465 million). Moreover, on 17 October, the More recently, a slowdown in the GCC economies European Union approved the disbursement of a following the drop in oil prices has had a direct €100 million loan, which marks the launch of the second Macro-Financial Assistance (MFA) Program 1 UNHCR records 654,903 registered Syrian refugees since 18 December 2017. 8 | Recent Economic and Policy Developments JORDAN ECONOMIC MONITOR | TOWARDS STRONGER EXTERNAL TRADE PERFORMANCE GDP Growth 2000-2017 Jordan's ICOR Percent (%) 10 9 9.5 8 7 6 Period Average : 5 2000-2009: 6.5% Period Average : 4 2010-2017: 2.5% 3.9 3 2 1 0 2017p 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Jordan 2000-2009 2010-2016 FIGURE 1. Since 2010, Jordan experienced low-growth FIGURE 3. …as suggested by a higher ICOR… equilibrium… Sources: Department of Statistics and World Bank staff calculations. Sources: Department of Statistics and World Bank staff calculations. Investment (as % of GDP) 1st pillar: Institutions 12th pillar: Innovation 7 2nd pillar: Infrastructure Real GDP Growth, rhs 6 3rd pillar: Macroeconomic 5 Private Investment As Share of GDP 11th pillar: Environment 4 Business Sophistication Percent (%) Total Investment Percent (%) 3 2 35 9 4th pillar: Health and 1 8 10th pillar: Primary Education 30 Market Size 0 7 25 6 5th pillar: Higher 20 5 9th pillar: Education and Technological Readiness 15 4 Training 3 8th pillar: 6th pillar: 10 Financial Market Development Goods Market 2 7th pillar: Efficiency 5 1 Labor Market Efficiency 0 0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 Jordan 2006 Jordan 2010 Jordan 2016 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 FIGURE 2. … despite a relatively high investment ratio… FIGURE 4. … and tradeoffs in human capital priorities Sources: Department of Statistics, Central Bank of Jordan and World Sources: Department of Statistics and World Bank staff calculations. Bank staff calculations. impact on Jordan due to well established economic suggested by (i) lower economic growth combined linkages (see Box 1). Consequently, annual growth with a high investment ratio since 2010 (Figure 2); continues to be far below the 6.5 percent average and (ii) a rise in the incremental capital output ratio achieved in the pre-regional crises period (Figure 1). (ICOR)2 from an average of 3.9 for the period 2000- On an income per capita basis, low growth coupled 2009 to 9.5 during 2010-2016 (Figure 3). with an upward revision of population estimates by United Nations Population Division), owing to the 6. Changes in the World Economic Forum’s inclusion of refugee population, led to a decline in (WEF) Global Competitiveness Indicator point to Jordan’s income per capita, moving Jordan down to possible explanations for the lower efficiency of the lower-middle income category (see Box 2). the economy in 2010-2016. To examine possible causes of lower efficiency, we consider the World 5. The prolonged period of low economic Economic Forum’s Global Competitive Index (GCI) growth also reflects inefficiencies in Jordan’s for Jordan over time, specifically, 2006, 2010 and economy. The impact of per dollar investment on 2016 (Figure 4). From 2006 to 2010, the GCI illustrates real GDP growth has declined since 2010. This is potentially attributed to increased inefficiency in 2 The ICOR is a metric that assesses the marginal amount of the economy or ‘poor quality’ of investments as investment capital necessary for an entity to generate the next unit of production. Recent Economic and Policy Developments | 9 THE WORLD BANK Semi-Annual Supply Side Contribution to Real GDP Growth Number of Tourists Net Taxes On Product Industry Real GDP (yoy growth) Services Agriculture Growth, rhs Percent (%) 40 Percentage Points Percent (%) 30 3.5 3.5 3.0 20 3.0 2.5 10 2.0 2.5 0 1.5 2.0 1.0 -10 0.5 1.5 -20 0.0 1.0 -30 -0.5 -1.0 0.5 -40 -1.5 0 -50 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 2010 2011 2012 2013 2014 2015 2016 2017 FIGURE 5. Growth slowed down by construction and the FIGURE 6. … a robust tourism sector … public sector but helped by … Sources: Department of Statistics and World Bank staff calculations. Sources: Central Bank of Jordan and World Bank staff calculations. a jump in technological readiness in tandem with a exports of goods and services on the demand side decline in health and primary education. The former (see paragraph 10). Overall economic activity is may be seen as generating momentum on growth expected to remain tempered for the rest of the through within sector efficiency or for the economy year with real GDP growth forecast at 2.1 percent in as a whole, whereas the latter impacts negatively 2017, compared to 2 percent in 2016. potential output leading to lower future growth. Over the period from 2010 to 2016, however, 8. Services continue to be the principal driver Jordan experienced a less pronounced jump on of real GDP growth in 2017, propelled by tourism. technological readiness, but more movement on the The construction sector contracted by 0.4 percent in innovation cluster (pillars 10-12), mixed gains in the H1-2017 yoy, compared to a pick-up of 1.7 percent in efficiency cluster (pillars 5-9), and mixed gains on H1-2016. Additionally, the public sector’s contribution the institutional cluster pillars (1-4). Interestingly, to growth regressed in H1-20173 and is expected to the 2010-2016 period also witnessed progress in remain soft for the rest of the year. Accounting for higher education and training, which bodes well for an average of almost 55 percent of GDP over the future growth prospects, although the setback in previous decade, the services sector is expected to the macroeconomic environment can have a severe continue being the largest contributor to growth in setback in the current investment environment. 2017 (Figure 6). Tourism has been especially robust The seeming trade-off between primary and higher as tourist receipts and the number of tourists surged education can be viewed as a re-allocation of limited during the first ten months of 2017 (10M-2017) by resources in the face of a scarce fiscal space. More respective 12.7 and 8.9 percent yoy, compared to broadly, while sustainable equitable growth and job contractions of 1.8 and 2.2 percent yoy in 10M-2016 creation necessitates an “expanding the pie” effect, (Figure 10). The industrial sector, which accounted Jordan’s economy tends to run into growth limits for almost 26 percent of GDP over the previous very quickly and depends on opportunistic drivers. decade, is also projected to be a positive contributor to growth. This would be led by mining and quarrying 7. Growth stagnates in 2017. Based on the and manufacturing, with the former witnessing a latest national accounts data, Jordan’s real GDP notable rebound, growing by 23.8 percent in H1- registered 2.1 percent yoy growth in the first half 2017 yoy, following 17.9 and 6.6 percent consecutive of 2017 (H1-2017) unchanged from H1-2016. On a contractions in H1-2016 and H2-2016. seasonally adjusted basis, real GDP growth averaged 1.8 percent, yoy, in H1-2017, compared to 1.7 percent in H1-2016 (Figure 5). Drivers for growth 3 The contribution of net taxes on products to real GDP are the services sector on the supply side and net growth regressed to 0.1 points in H1-2017, compared to 0.2 points in H1-2016. 10 | Recent Economic and Policy Developments JORDAN ECONOMIC MONITOR | TOWARDS STRONGER EXTERNAL TRADE PERFORMANCE BOX 1. Jordan-GCC Economic Linkages. Historically, strong linkages between Jordan’s economy and those of the GCC countries have exposed the former to the business cycle shocks sourced from the latter. Oil price movements, which are primary drivers of the business cycle in the GCC, are correlated with inflows into Jordan with effects on the real economy. Moreover, non-oil shocks from the GCC region have also impacted the Jordanian economy, as in the 2009-2010 GCC financial crisis, which constituted second degree effects of the 2008 global financial crisis. As can be expected, the recent economic deceleration in the GCC countries added to ongoing sluggishness in Jordan, that has been in effect since the GCC financial crisis in 2010, and then prolonged by the turbulence in nearby Syria and Iraq. The impact of lower oil prices on Jordan’s economy is two-pronged along two different time lines. In the short run, being a large importer of energy, Jordan generally benefitted from the drop in oil prices via a shrinkage in its energy import bill, and thus improvements in its balance of payments. This effect is especially significant for a small open economy with a fixed exchange rate regime, as in the case of Jordan. In the long run, protracted softening of oil prices that lead to decelerations in GCC economies, can translate into decreased inflows into and exports from Jordan with negative effects on the real economy. Jordan’s strong economic linkages with the Gulf are transmitted via several primary channels, namely: ex- ports of merchandize goods, tourism, remittances and financial inflows. i. Exports:  Exports to the GCC region constituted almost a fifth of Jordan’s total exports over the past decade. Out of 148 countries, four of the six GCC states ranked amongst the biggest 10 export destinations for Jordan, with Saudi Arabia ranking second, Kuwait fifth, UAE sixth and Qatar seventh.* As such, total ex- ports to the GCC are heavily weighted towards Saudi Arabia, with almost half of the exports to GCC since 2003 destined there (Figure 7). As a result, the recent economic slowdown in the Gulf, and in Saudi Arabia specifically, took its toll on Jordanian exports. Domestic exports to the Gulf declined by 12.9 percent yoy in the first eight months of 2017 (8M-2017) compared to 8M-2016, with exports to Saudi Arabia being the main drag (causing 74.6 percent of the contraction).**  On a product basis, hardest hit were ‘beverages and tobacco,’ ‘animal and vegetable oils, fats and waxes’ and ‘machinery and transport equipment,’ each deteriorating by 56, 49 and 30 percent during the first eight months of 2017 (8M-17) compared to the same period in 2016 (Figure 8).  Geopolitics has weighed heavily on Jordan’s trade sector, going back to the first Gulf war in 1990, through the 2003 US invasion of Iraq, followed by the recent regional turmoil. The latter includes substan- tial negative implications on Jordan’s balance of payments and growth from the cut in Egyptian gas supply and the closure of essential trade routes through Syria and Iraq. Even more recently, the closure of Qatar’s borders with its neighbors is also likely to trickle down negatively on Jordanian exports given that Qatar is one of Jordan’s principal export destinations. This however could be mitigated by the reopening of trade routes between Jordan and Iraq. Domestic Exports to GCC (Jan-Aug) Change in Domestic Exports (Jan-Aug, yoy) UAE Oman Saudi Arabia, rhs Kuwait Bahrain GCC, rhs Crude Materials, Inedible, Except Fuels 16.0% Qatar -7.0% Mineral Fuels, Lubricants and Related Materials -7.8% Manufactured Goods Classified by Material JD Thousand JD Thousand -10.6% Food and Live Animals 200,000 1,000,000 -12.7% Chemicals 800,000 150,000 -12.9% Domestic Exports 600,000 -21.7% Miscellaneous Manufactured Articles 100,000 400,000 -30.3% Machinery and Transport Equipment 50,000 -49.0% Animal and Vegetable Oils, Fats and Waxes 200,000 -56.0% Beverages and Tobacco - - -72.8% Not Classified Elsewhere 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 FIGURE 7. Domestic exports to GCC are deteriorating… FIGURE 8. …across a range of products Sources: Department of Statistics and World Bank staff calculations. Sources: Central Bank of Jordan and World Bank staff calculations. *Oman ranks 16th and Bahrain ranks 19th. **Data source: Department of Statistics, September 2017. Recent Economic and Policy Developments | 11 THE WORLD BANK BOX 1. Jordan-GCC Economic Linkages. ii. Tourism:  GCC tourists are a key source of hard currency for Jordan. Tourism is considered one of the pillars of the Jordanian economy, with tourist receipts constituting more than 63.0 percent of Jordan’s exports of services in the past decade. GCC tourists have accounted for almost 12 percent of total tourist receipts in Jordan during the first ten months of 2017.  Whereas tourism resurged in the first ten months 2017 (10M-2017), as the security situation im- proved, tourist receipts from the GCC region did not pick up commensurately. Tourist receipts from the GCC grew by only 5.8 percent yoy in 10M-2017, compared to an increase of 12.7 percent yoy in total tourist receipts. Meanwhile, tourist arrivals (same day and overnight tourists) from GCC countries increased by 8.3 percent yoy in 10M-2017, comparable to the growth in total tourist arrivals (8.9 percent yoy). This goes counter to historic trends characterized by comparatively larger spending per GCC tour- ist (Figure 9). Deteriorating economic conditions in the GCC region, a consequence of prolonged low oil prices, seem to have lowered spending power of the GCC tourist. iii. Remittances:  Remittances have always been a key pillar of Jordan’s economy, accounting for an average of 11.4 percent of GDP annually over the past decade (Figure 10). Remittances grew at an annual average of 8.5 percent between 2000 and 2008. However, they have slowed down since the 2009-2010 GCC financial crisis, recording an average annual growth rate of 0.7 percent since. Indeed, of almost 750,000 Jordanian expatriates, the majority are located in the Gulf with almost 40 percent in Saudi Arabia and 27 percent based in UAE.*** iv. Financial Inflows:  A survey conducted by the Central Bank of Jordan in end-2009 tracks FDI origins into Jordan and remains the latest available data on the geographical breakdown of FDI. The survey, which while is outdated is the source of the latest available data on a geographical disaggregation of FDI. It shows that 49.8 percent of total net FDI inflows were from the GCC region, with Saudi Arabia and Kuwait having the lion shares, each making up 18.2 and 15.6 percent of total net FDI to Jordan, respectively. Tourist Receipts FDI and Remittances, net (% of GDP) FDI (as a share of GDP) Total Tourist Receipts Remittances (as a share of GDP) Receipts from GCC Tourists Real GDP Growth, rhs JD Million Percent (%) Percent (%) 3,500 25.0 9.0 8.0 3,000 20.0 7.0 2,500 6.0 15.0 2,000 5.0 4.0 1,500 10.0 3.0 1,000 5.0 2.0 1.0 500 0.0 0.0 - 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 FIGURE 9. Tourist receipts from GCC are sluggish… FIGURE 10. …while FDI and remittances deteriorate Sources: Ministry of Tourism and Antiquities and World Bank staff Sources: Central Bank of Jordan and World Bank staff calculations. calculations. ***Source: The Economist Intelligence Unit, “Jordan economy: Quick View - Remittance earnings edge up”, 13 July 2017 12 | Recent Economic and Policy Developments JORDAN ECONOMIC MONITOR | TOWARDS STRONGER EXTERNAL TRADE PERFORMANCE Mining, Quarrying and Manufacturing Semi-Annual Demand Side Contribution to Real GDP Growth Mining and Quarrying Net Exports Real GDP Growth (rhs) Manufacturing Public Consumption Public Investment Mining of chemical and fertilizer minerals Private Demand Index 160.00 Percentage Points Percent (%) 140.00 15 3.5 12.5 3.3 3.0 120.00 10 2.8 100.00 7.5 2.5 5 2.3 80.00 2.5 2.0 1.8 60.00 0 1.5 -2.5 1.3 40.00 -5 1.0 20.00 -7.5 0.8 0.5 - -10 0.3 -12.5 0.0 September September December November October October June June March March February May February May April April August August July July January January H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 2016 2017 2011 2012 2013 2014 2015 2016 2017 FIGURE 11. … and a recovering mining and quarrying FIGURE 12. Net exports and private demand drive sector growth from the demand side Sources: Central Bank of Jordan and World Bank staff calculations. Sources: Department of Statistics, Ministry of Finance and World Bank staff calculations. 9. On the expenditure side, 2017 growth is led by net exports and private demand (private consumption and investment), as public demand (government consumption and investment) continues to be weighed down by fiscal consolidation efforts. The recovery in mining and quarrying reflects increased international demand for Jordan’s potash, as indicated by an improvement in the mining and quarrying component of the industrial production quantity index—which rose by 14.6 percent in 10M-2017 compared to a deterioration of 10.1 percent in 10M-20164 (Figure 11). This, in addition to the reopening of trade routes with Iraq and strong tourism, will place net exports of goods and services as a key driver for growth in 2017. In fact, in H1-2017, a 3.6 percent yoy pick-up in real exports of goods and services more than offset 1.4 percent higher imports, making net exports the second contributor to growth from the demand side. The largest contributor to growth in H1-2017 was private demand (Figure 12), mostly due to strong performance in Q2-2017. Meanwhile, public consumption and investment were drags on growth in H1-2017, each retrenching growth by 0.5 and 0.2 pp, respectively, largely reflecting government’s fiscal consolidation efforts complemented by the IMF-EFF agreement. This dynamic is likely to persist for the rest of the 2017. 4 The overall industrial production quantity index contracted by 1.1 percent yoy in 10M-2017, compared to 2.1 percent yoy contraction recorded in 10M-2016. Recent Economic and Policy Developments | 13 THE WORLD BANK BOX 2. Jordan’s Country Reclassification to Lower-Middle-Income. In the latest update on the classification of world economies released in July 2017, the World Bank reclas- sified Jordan from an upper-middle-income country to a lower-middle-income country. The classification is based on the most updated income per capita data and inflation-adjusted revisions of thresholds that separate the four categories: high-income, upper-middle-income, lower-middle-income and low-income. The table below presents the four categories with the respective thresholds of income per capita adopted in the 2016 and 2017 classifications. July 2016 July 2017 Threshold (old thresholds in $US) (new thresholds in $US) Low-income < US$1,025 < US$1,005 Lower-middle-income US$1,026 - US$4,035 US$1,006 - US$3,955 Upper-middle-income US$4,036 - US$12,475 US$3,956 - US$12,235 High-income > US$12,475 > US$12,235 The new income classification is based on 2016 gross national income per capita (GNI/capita) figures that placed Jordan in the lower-middle-income category. The downward revision of GNI/capita was brought forward by three factors: 1. An upward revision of Jordan’s population data published by the UN Population Division (UNPD) estimated Jordan’s de facto population based on estimates from the Jordanian government, the latest 2015 census and UNHCR’s estimates of refugees. 2. A slowdown in real GDP growth. Jordan’s economy slowed down in 2016 for the second year in a row, recording 2.0 real GDP growth, down from 2.4 percent in 2015, and well below the 6.5 percent annual aver- age recorded in the 2000-2009 period. 3. Low inflation. Jordan witnessed price deflation in 2015 and in 2016, largely due to downward pressures on international food and oil prices. 2015 GNI/capita (US$) 2016 GNI/capita (US$) Threshold used for 2016 classification used for 2017 classification 4,680 3,920 Jordan Upper-middle-income in July 2016 Lower-middle-income in July 2017 classification classification The reclassification to a lower income category will not by itself alter World Bank lending criteria to Jordan. Income per capita is only one of a number of factors influencing lending criteria, alongside credit worthiness and policy and institutional environment. Therefore, despite Jordan’s reclassification to lower-middle-income, Jordan still qualifies for lending from the International Bank for Reconstruction and Development arm of the World Bank Group and not from the International Development Association. ***Source: The Economist Intelligence Unit, “Jordan economy: Quick View - Remittance earnings edge up”, 13 July 2017 14 | Recent Economic and Policy Developments JORDAN ECONOMIC MONITOR | TOWARDS STRONGER EXTERNAL TRADE PERFORMANCE Refined Economic Activity Unemployment Rate Rate* 61.2% Difference of 19.8 Difference of percentage 43.2 points percentage points 33.5% 18% 13.7% Females Males Females Males FIGURE 13. Gender-based heterogeneity in main labor market indicators amplified with new methodology. Sources: Department of Statistics and World Bank staff calculations. *Refined economic activity rate refers to the labor force attributed to the population 15 years and over. with the previous methodology, youth remains the Labor and Employment age group with the highest rate of unemployment,5 while Jordanians holding university degrees also 10. With the Jordanian economy seemingly exhibit a high level of unemployment at 23 percent stuck in a low-growth equilibrium, its labor in H1-2017. Gender-based heterogeneity was market continues to be weak and structural always reflected in previously published data, with unemployment remains high. The Department of Jordan known to have lagged MENA and non-MENA Statistics (DoS) has adopted a new methodology averages of female labor force participation.6 As for the labor force survey since Q1-2017 based such, unemployment for women averaged 33.5 on recommendations from the International Labor percent, while that for males averaged 13.7 percent Organization in order to enhance the accuracy of in H1-2017 (Figure 13).7 the survey. The new methodology narrowed down the range of those considered employed, included additional questions, and expanded the survey sample size from 13,000 to 16,000 households based on the new framework provided by the 2015 Population Census. The new methodology revealed an average unemployment rate of 18.1 percent in H1-2017, and labor force participation of 39.7 percent. 5 Unemployment for the 15-19 and 20-24 age categories registered 39.5 percent and 35.4 percent, respectively. 11. Although not directly comparable to 6 Jordan, Promoting poverty reduction and shared prosperity: systematic country diagnostic, 2016. previously published labor market data, the 7 A gender-specific implication of the new methodology is results from the new methodology are consistent that excluding unpaid workers from the “employed persons” with previous statistics in that both reflect similar category severely affects the count of women in the informal vulnerabilities for women and youth. Consistent labor market, thus further exacerbating the gender bias in the results. Recent Economic and Policy Developments | 15 THE WORLD BANK Fiscal Balance (% of GDP) Jordan Debt to GDP Ratio (1998-2017) (Jan - Oct) Internal Debt to GDP Ratio Domestic Revenues External Debt to GDP Ratio Expenditures Percent (%) Percent (%) Percent (%) Total Debt to GDP Ratio Fiscal Deficit (excluding grants, rhs) 120 35.0 Fiscal Deficit (including grants, rhs) 9.0 30.0 8.0 100 7.0 25.0 80 6.0 20.0 5.0 60 15.0 4.0 3.0 40 10.0 2.0 5.0 20 1.0 0.0 0.0 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2017 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 FIGURE 14. Fiscal deficit widens in 10M-2017… FIGURE 15. … and gross debt-to-GDP ratio stabilizes Sources: Ministry of Finance and World Bank staff calculations. Sources: Ministry of Finance and World Bank staff calculations. 13. Indeed, actual data over 10M-2017 Fiscal Policy illustrate relatively weak performance in the fiscal aggregates compared to the same period in 2016. 12. Lower grants and sluggish tax revenues The 10M-2017 overall fiscal deficit (including grants) are expected to induce a slight deterioration widened by 0.66 pp of GDP yoy, while the primary in Jordan’s fiscal balances in 2017 despite surplus (including grants) declined by 0.64 pp yoy government’s fiscal consolidation efforts. The turning into a deficit of 0.56 percent of GDP (Figure 14). projected overall fiscal deficit, excluding (including) On the revenue side, a 0.13 pp increase in domestic grants, in 2017 is forecast at 6.4 (3.4) percent of GDP, revenues in 10M-2017, stemming from an increase compared to 6.2 (3.2) percent in 2016. This is despite in nontax revenues that overrode lower tax revenues, the introduction of revenue-enhancing measures as was more than offset by higher expenditures. Total part of the government’s fiscal consolidation efforts expenditures rose by 0.27 pp in 10M-2017, driven by supported by the IMF-EFF arrangement such as: both current and capital expenditures. raising the Good and Services Tax (GST) rate to 16 percent (from 8 percent), removing exemptions 14. Growth rate of debt stabilizes. Compared on selected goods and services, increasing custom to end-2016 levels, the debt stock increased by duties on non-essential imported goods, among an estimated US$ 1.54 billion to reach US$38.4 others.8 On the revenues side, lower tax revenues billion by end-October 2017, equivalent to 95.8 resulting from weak growth are projected to be percent of forecasted 2017 GDP, compared to 95.1 offset by higher non-tax revenues, leaving the percent of GDP by end-2016, with 57.8 percent of domestic revenues-to-GDP ratio largely unvaried. the debt denominated in local currency (Figure 15). As for expenditures, the ratios of wages and salaries- Higher borrowing needs by the government-owned and interest payments-to-GDP are expected to lead Water Authority of Jordan (WAJ), whose debt is a 0.2 pp rise in total expenditures, which is projected government-guaranteed, was a factor. WAJ’s growing to reach 29.2 percent of GDP in 2017. In reflection financing needs stem from the impact of higher of a worsening overall fiscal position, the primary electricity tariffs and increased demand for water balance, excluding (including) grants, is expected from Syria refugees. The National Electric Power to be -3.3 (-0.4) percent of GDP, compared to -3.2 Company (NEPCO) had posed debt pressures over (-0.2) percent in 2016. the period 2013-2015 when it switched to oil-fueled power generation from cheaper gas whose supply 8 On February 8, 2017, the government endorsed multiple revenue-boosting measures within the framework of the IMF- from Egypt was abruptly cut off. In 2015, with LNG EFF. For more information on these measures, please refer to terminals in Aqaba coming on line, NEPCO achieved World Bank, Jordan Economic Monitor, Spring 2017, paragraphs 12 and 14. cost recovery which is expected to be maintained 16 | Recent Economic and Policy Developments JORDAN ECONOMIC MONITOR | TOWARDS STRONGER EXTERNAL TRADE PERFORMANCE by the tariff adjustment mechanism introduced in energy imports that increased by 19.7 percent yoy in January 2017. Debt held by WAJ and NECPO during 9M-2017, mirroring higher oil prices. Non-oil combined (including advances from the treasury and imports, on the other hand, increased by 3.4 percent on-lending loans) constituted about 25.7 percent of yoy, despite a 5 percent increase in custom duties on Jordan’s gross debt by end-2016. non-essential imported goods.10 Domestic exports in 9M-2017 continued to be challenged by land route 15. Debt sustainability is only assured with closures with Iraq and Syria. Domestic exports to relatively optimistic assumptions including GCC (see also Box 1) dropped by 10.1 during 9M- continued donor support. Although the first 2017 compared to the same period in 2016 while review of the IMF program was completed in June exports to Syria and Iraq slightly increased by 3.1 and 2017, there is a US$1.25 billion financing gap for 1.7 percent, respectively, although largely reflecting the second half of 2018, which is presumed to low-base effects (Figure 17). However, Jordan’s be covered by the issuance of a non-guaranteed export performance is expected to improve in the Eurobond9. The downward trajectory for public latter part of 2017 with the reopening of trade routes debt is predicated on successful debt rollover at between Jordan and Iraq that was announced on manageable terms and continued implementation of August 30, 2017,11 and the lifting of UAE and Kuwait’s fiscal consolidation. External sustainability relies on bans on Jordanian produce.12 Moreover, exports of similar assumptions and an increase in FDI drawn by potash have already recovered by 18.1 percent yoy successful structural reforms. The persistent current in 9M-2017 compared to a 33.9 percent contraction account deficit adds to financing requirements from in 9M-2016. Furthermore, a robust tourism sector external debt rollover, especially in 2019-20 when is projected to generate larger travel receipts further two US guaranteed issuances become due. The supporting the services balance and more than government has been borrowing less internally and offsetting the widening in the merchandize trade more externally helping to reduce the crowding balance, thus driving an improvement in the overall out of the private sector. Indeed, commercial bank trade in goods and services balance. lending to the private sector grew by 10.2 percent yoy by October 2017, while that to the public sector 17. The overall current account deficit is grew by only 1.6 percent yoy by October 2017 (refer expected to narrow, in reflection of the improving to paragraph 19). The balancing act in the debt mix services balance in 2017. Latest balance of payments is therefore contingent on continued market access (BoP) figures show that the current account deficit at favorable terms. narrowed to 6 percent of forecasted GDP in the first half of 2017 (H1-2017), in contrast to 6.2 percent of GDP in H1-2016. This improvement is led by a 0.7 pp improvement in the services balance coupled with a 0.2 pp increase in the income account, which External Position jointly more than offset the 0.3 pp wider trade- in-goods deficit and the 0.5 pp decline in current 16. Increased exports of services are expected transfers (Figure 18). While net remittances increased to more than offset a wider merchandize trade deficit, in turn helping to mitigate the overall 10 On February 8, 2017, the government endorsed multiple revenue-boosting measures, including the 5 percent increase in trade in goods and services deficit. A disappointing custom duties on non-essential imported goods. performance for the trade-in-goods balance in 9M- 11 There has already been a gradual pick-up in exports to 2017 resulted in the deficit widening by 11.2 percent Iraq since June 2017. Prior to this, Jordan’s exports to Iraq had yoy, compared to 9M-2016, led by a 5.6 percent declined by 41.7 percent in 2015 and 34 percent in 2016, largely due to the border closure. increase in total imports coupled with a 2.8 percent 12 UAE and Kuwait briefly banned imports of some Jordanian decrease in total exports (Figure 16). The rise in agricultural produce claiming quality concerns. Kuwait merchandize imports was largely due to a rebound subsequently lifted its ban on September 12, 2017 — after three months — while UAE lifted its ban on 27 July 2017 — after two 9 IMF Article 4 July 2017 months. Recent Economic and Policy Developments | 17 THE WORLD BANK Merchandise Trade Balance Current Account Balance - H1 (Jan-Sep) Current Transfers Income Account Exports Imports Trade Deficit Trade Balance Current Account US$ bln US$ million 18.0 4,000 16.0 3,000 14.0 2,000 12.0 1,000 10.0 0 8.0 -1,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 6.0 -2,000 4.0 -3,000 2.0 -4,000 0.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 -5,000 FIGURE 16. A disappointing performance for trade to be FIGURE 18. Current account deficit narrows… followed by an expected recovery… Sources: Central Bank of Jordan and World Bank staff calculations. Sources: Central Bank of Jordan and World Bank staff calculations. Domestic Exports to Top Destinations (% of GDP) and food prices; (ii) the introduction of tax-enhancing (Jan - Sep) measures13; and (iii) the recent depreciation in the US UAE Iraq Syria dollar. As such, the 12-month headline inflation rate Percent (%) India U.S.A. GCC Saudi Arabia reached 3.3 percent in the first eleven months of 2017 4.50 4.00 (11M-2017), in comparison to -0.9 percent recorded 3.50 3.00 over the same period in 2016 with inflationary 2.50 trends cutting across most categories. The recovery 2.00 1.50 in inflation over 11M-2017 has been mainly driven 1.00 by: ‘transportation’ and ‘fuel and lighting’, that grew 0.50 - by 13.0 and 2.7 percent yoy, respectively, largely 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 reflecting the pick-up in international oil prices; FIGURE 17. … as exports to major trade partners ‘tobacco and cigarettes’ (+8.0 percent); and ‘rents’ projected to pick up (+2.5 percent). Moreover, core inflation (excluding Sources: Central Bank of Jordan and World Bank staff calculations. food, transportation and fuel) recorded a 3.4 percent yoy average over the same period, compared to 2.1 by 0.8 percent yoy during 9M-2017, in contrast to percent during 11M-2016. Core was mainly driven a 4 percent yoy contraction in 9M-2016, we expect by ‘rents’, ‘tobacco and cigarettes’, ‘health’, ‘culture them to reach 8.5 percent of forecasted GDP in 2017, and recreation’, ‘education’ and ‘personal care’. largely unchanged from 2016 (8.6 percent of GDP). Due to the provisional nature of the drivers behind inflationary pressures, inflation is expected to ease over the medium term as low-base effects start receding and commodity prices stabilize. Moreover, the two years of price deflation drove Jordan’s real Monetary Policy and exchange rate vis-à-vis major trading partners to a low in Spring 2016, after which it appreciated through Finance end-2016, when it more or less held steady until June 2017 (Figure 20).14 18. After two years of deflation, consumer price levels nudged upwards in 2017. Consumer prices 13 Government introduced taxes, fees and customs duties in 2016 and 2017 (for more details please refer to paragraphs 12 have registered positive growth rates in 2017 and are and 14 in the Jordan Economic Monitor, Spring 2017 Issue). The projected to average 3.1 percent for the year (Figure government also started removing general sales tax exemptions in 2017 in line with the IMF-EFF program. 19). Inflationary pressures are largely due to low-base effects driven by (i) a global recovery in international oil 14 Jordan, Promoting poverty reduction and shared prosperity: systematic country diagnostic, 2016. 18 | Recent Economic and Policy Developments JORDAN ECONOMIC MONITOR | TOWARDS STRONGER EXTERNAL TRADE PERFORMANCE Headline and Core Inflation - yoy growth Interest Rates Percent (%) Headline Inflation Core Inflation Average Lending Rate, Nominal (%) Average Lending Rate, Real (%) 8.0 Policy Lending Rate, Nominal (%) Policy Lending Rate, Real (%) 6.0 12 4.0 10 8 2.0 6 4 0.0 2 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 0 -2.0 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 -2 -4.0 -4 FIGURE 19. Inflation hovers in positive territory after a FIGURE 21. Real interest rates picking up since January two-year deflation 2017... Sources: Department of Statistics and World Bank staff calculations. Sources: Central Bank of Jordan and World Bank staff calculations. Real Exchange Rate vs. Major Trading Partners Commercial Bank Lending - yoy growth United States Iraq Total Lending to Public Sector, yoy change UAE Kuwait Total Lending to Private Sector, yoy change, rhs KSA Percent (%) Percent (%) Percent (%) 106 180% 12% 104 160% 102 10% 100 140% 98 120% 8% 96 100% 94 80% 6% 92 90 60% 88 4% 40% 86 20% 2% 2013M03 2013M05 2013M07 2013M11 2014M01 2014M05 2014M07 2014M09 2015M01 2015M03 2015M07 2015M09 2015M11 2016M03 2016M05 2016M09 2016M11 2017M01 2017M05 2017M07 2013M01 2013M09 2014M03 2014M11 2015M05 2016M01 2016M07 2017M03 0% Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 -20% 0% FIGURE 20. Exchange market pressure driven by foreign FIGURE 22. ...yet commercial bank lending to private inflows sectors grows Sources: Central Bank of Jordan, International Financial Statistics and Sources: Central Bank of Jordan and World Bank staff calculations. World Bank staff calculations. lending to the private sector15 grew by 10.2 percent 19. The Central Bank of Jordan (CBJ) has yoy by October 2017 (Figure 22), slightly higher than adopted a contractionary monetary policy in the 9.7 percent yoy growth reported by end-2016. line with Federal Reserve Board (FED) hikes to maintain an attractive risk premium and support 20. Foreign reserves during the first ten the exchange rate peg. CBJ raised its interest rates months of 2017 (10M-2017) decrease compared to four times since December 2016 (Figure 21), once their level in 2016, despite the successive interest by 50 bps and the other three by 25 each, thus rate hikes. The deposit dollarization rate16 reached adding 50 bps to the interest rate gap vis-à-vis 19.2 percent in October 2017, 30bps higher than US rates compared to the period prior to the FED end-2016 levels (Figure 23). This has reflected on interest rate hikes. The impact of these interest rate the stock of foreign exchange reserves at CBJ, which hikes on private sector borrowing has nonetheless declined by 9.0 percent since end-2016 to reach been mitigated by a crowding in effect of the US$ 11.7 billion by October 2017 (6.6 months of government resorting more to external financing imports of goods and services, excluding re-exports) to cover its fiscal needs via issuances of Eurobonds and concessional borrowing from multilateral and 15 Private sector includes resident and non-resident private sector, in addition to financial institutions. bilateral organizations. As a result, commercial bank 16 The dollarization rate is the share of deposits in USD to total deposits. Recent Economic and Policy Developments | 19 THE WORLD BANK Dollarization Rate (%) Amman Stock Exchange Weighted Index Percent (%) Point 4,800 30.0 4,700 25.0 4,600 4,500 20.0 4,400 4,300 15.0 4,200 4,100 10.0 4,000 3,900 5.0 3,800 2-1-2014 3-2-2014 4-3-2014 2-4-2014 4-5-2014 3-6-2014 2-7-2014 6-8-2014 4-9-2014 8-10-2014 06-11-2014 7-12-2014 1/12/2015 2/10/2015 3/12/2015 4/12/2015 5/12/2015 6/11/2015 7/12/2015 8/12/2015 9/10/2015 10/14/2015 11/15/2015 12/15/2015 1/14/2016 2/14/2016 3/14/2016 4/12/2016 5/12/2016 6/14/2016 7/18/2016 8/15/2016 9/21/2016 10/20/2016 11/20/2016 12/20/2016 22-01-2017 20-02-2017 21-03-2017 19-04-2017 21-05-2017 20-06-2017 25-07-2017 24-08-2017 28-09-2017 29-10-2017 27-11-2017 0.0 Ap 1 1 O 1 1 Ap 2 2 O 2 2 Ap 3 3 O 3 3 Ap 4 4 O 4 4 Ap 5 5 O 5 5 Ap 6 6 O 6 6 Ap 7 7 O 7 7 1 r-1 l-1 -1 1 r-1 l-1 -1 1 r-1 l-1 -1 1 r-1 l-1 -1 1 r-1 l-1 -1 1 r-1 l-1 -1 1 r-1 l-1 -1 n- n- n- n- n- n- n- ct ct ct ct ct ct ct Ju Ju Ju Ju Ju Ju Ju Ja Ja Ja Ja Ja Ja Ja FIGURE 25. Stock exchange recovers then declines since FIGURE 23. Dollarization rate levels end-2016 Sources: Central Bank of Jordan and World Bank staff calculations. Source: Central Bank of Jordan and World Bank Reserves and Import Coverage Ratio Credit to Private Sector (as % of GDP) Foreign Reserves in USD Reserves as months of imports exluding re-exports Foreign Reserves Reserves as Months Percent (%) in USD of Imports 15,000 9.0 50% 13,000 8.0 40% 7.0 11,000 9,000 6.0 30% 5.0 7,000 4.0 20% 5,000 3.0 3,000 2.0 10% 1,000 1.0 0% -1,000 - 2011 2012 2013 2014 2015 2016 Oct-17 16 16 6 6 6 6 6 16 16 6 6 6 17 17 7 7 7 7 7 17 17 7 -1 r-1 -1 -1 l-1 -1 -1 -1 -1 r-1 -1 -1 l-1 -1 n- b- g- p- n- b- g- p- ar ay ne ct ov ec ar ay ne ct Ju Ju Ap Ap Au Au Ja Fe Se Ja Fe Se O O M M M M D N Ju Ju FIGURE 24. A decline in foreign reserves at the Central FIGURE 26. Credit to the private sector largely unvaried Bank induced by a confluence of factors in 2017 Sources: Amman Stock Exchange and World Bank staff calculations. Sources: Central Bank of Jordan and World Bank staff calculations. (Figure 24). A CBJ-mandated reclassification of bank of insurance, banking, industry and services dropped deposits and one-off transactions,17 go some way by 9.4, 3.0, 2.4 and 1.4 percent, respectively. to help explain these foreign exchange movements. Moreover, the total value traded at Amman Stock However, exchange market pressures stemming Exchange increased by 49.5 percent yoy during from weakened confidence in the local currency has 10M-2017 compared to the same period in 2016, persisted despite higher interest rates, Eurobond bolstered by the trading performance of the financial issuances (US$ 1 billion in October 2017 and US$ sector. Indeed, total value traded in the financial 500 million in May 2017) and receipt of concessional sector increased by 73.8 percent yoy during 10M- financing. 2017, which outweighed 22.7 and 13 percent drops in the value traded in the industrial and services 21. The Amman Stock Exchange Index (ASEI) sectors, respectively. underwent a sharp recovery from Q4-2016 until Q1-2017, then declined thereafter. Overall, by 22. Jordanian banks remain stable, profitable, end-November 2017 the ASEI deteriorated by 2.6 liquid and adequately capitalized. After improving percent since end-2016 (Figure 25). All ASEI sectors for five consecutive years despite low economic growth since 2010, banks’ nonperforming loans 17 In 2017, substantial foreign investors’ shares in Arab Bank (NPL) ratio declined slightly to 4.4 percent by H1- and Dubai Islamic Bank were sold to mostly local investors, 2017 compared to 4.3 percent by end-2016 (Table 1). causing an outflow of hard currency. 20 | Recent Economic and Policy Developments JORDAN ECONOMIC MONITOR | TOWARDS STRONGER EXTERNAL TRADE PERFORMANCE However, banks’ return on equity (ROE) and return on assets (ROA) both improved to respective 9.4 and 1.2 percent by H1-2017, compared to 8.8 and 1.1 percent in the preceding year. Meanwhile, the capital adequacy ratio and leverage ratio retracted to 17.6 and 12.9 percent by H1-2017, down from 19 and 13 percent by end-2016, respectively. Banks’ exposure to sovereign debt continued a trend decline, accounting for 34.2 percent of total assets by end-October 2017, lower than end-2016, end- 2015 and end-2014 levels that stood at 36.2, 40.6 and 40.8 percent, respectively. Finally, Jordan’s net foreign asset position of its commercial banks stood at minus US$2 billion by end-October 2017, declining from minus US$1.4 billion by end-2016 levels yet depicting a sound improvement compared to minus US$2.8 billion by end-2015. More generally, credit to the private sector stood at 43.9 percent of forecasted GDP by October 2017, unchanged since end-2016 levels, thus maintaining the improvement since reaching a trough in 2014. In general, credit to the private sector has dropped to a lower plateau since 2010, as it recorded an average share of GDP of 37.4 percent between 2010-2016, compared to a 52.4 percent average share in the pre-slow growth period of 2000-2009 (Figure 26). Table 1. Financial Soundness Indicators. (in percent unless otherwise stated) 2010 2011 2012 2013 2014 2015 2016 H1-2017 Nonperforming Loans/Total Loans 6.7 8.2 8.5 7.7 7.0 5.6 4.9 4.3 4.4 Provisions (in percent of classified loans) 52.0 52.4 52.3 69.4 77.0 77.6 74.7 78.2 79.3 Risk-weighted Capital Adequacy Ratio 19.6 20.3 19.3 19.0 18.4 18.4 19.1 19.0 17.6 Leverage Ratio 13.0 13.1 13.1 13.3 12.9 12.5 12.7 13.0 12.9 ROE 8.8 8.8 8.3 8.6 9.9 11.0 10.3 8.8 9.4 ROA 1.1 1.1 1.1 1.1 1.2 1.4 1.3 1.1 1.2 Net Profits Before Taxes (in JD million) 460.0 523.0 517.0 588.0 719.0 822.0 862.0 750.3 413.1 Liquidity Ratio 159.1 161.4 152.9 143.5 149.1 152.2 149.0 138.1 129.2 Growth Rate of Total Assets 7.4 9.6 7.9 4.3 9.1 4.9 5.1 2.8 0.3 Growth Rate of Customer Deposits 12.1 10.9 8.3 2.4 10.5 9.3 7.7 0.9 -0.3 Growth Rate of Credit Facilities 2.1 8.6 9.8 12.5 6.3 5.2 9.6 8.7 5.0 Source: Central Bank of Jordan Recent Economic and Policy Developments | 21 THE WORLD BANK PROSPECTS 23. Jordan’s economy is expected to remain limiting measures as the government seeks to significantly affected by regional events in Iraq put the public finances on a stronger footing. and Syria as well as the slowdown in GCC’s One contentious reform to broaden the tax base economic performance. Based on the assumptions aims to adjust the income tax law by lowering the that (i) these determinants will largely remain minimum threshold at which income becomes unchanged over the medium term, and that (ii) the taxable. This can heighten social tensions amid a pace of economic reforms persists sluggishly, we sensitive political and geopolitical environment. expect only a marginal pick-up in the economy. Nonetheless, for our baseline scenario, we make the Moreover, anticipated contractionary fiscal and assumption that Jordanian authorities will be able monetary policies will further weigh down on growth to successfully pursue fiscal consolidation. Based prospects. Sectorally, services and industry are on that, the overall fiscal deficit, excluding grants, expected to continue nudging the economy forward. is projected to almost halve over the medium term, In particular, it is anticipated that services would while the primary balance would finally be brought be driven by tourism. On the demand side, private to a surplus. The improvement in the fiscal account consumption and private investment (real estate) are will also reflect on the Jordan’s gross debt over the expected to regain momentum in the medium term medium term, as it is forecast to stabilize. Monetary after periods of stagnation. In addition, the recent policy tightening is also anticipated to preserve the (end-August) reopening of the trade route between attractiveness of the Jordanian Dinar in light of Fed Jordan and Iraq is expected to have a positive impact rate hikes and in support of the JD-US exchange rate on the economy, and especially the external account peg. in the medium term. Overall, real GDP growth in 2018 and 2019 are forecasted to vary minimally to 26. With a challenging regional outlook, 2.2 and 2.4 percent, respectively. sluggish economic reforms, and contractionary fiscal and monetary policies in place, it is difficult 24. Jordan’s current account deficit is to foresee a strong recovery in growth. Structurally, expected to also vary little over the medium term Jordan’s long-term macroeconomic vulnerability as improving exports are almost offset by growing stems from sizable internal and external imbalances imports. The current account deficit will narrow that generate large financing needs, which are marginally in 2018 and 2019 to 8.7 percent and 8.6 typically met via international assistance. Moreover, percent of GDP, respectively. These are expected to it is not clear that present consolidation efforts will be driven by a strong performance in merchandize be effective. In fact, the IMF-EFF program is the exports and services, with the latter being driven by latest in a series of multilateral lending operations tourism. Simultaneously, imports are projected to for Jordan, including, a World Bank programmatic grow mainly due to higher energy imports, echoing DPL in 2012, 2013 (US$ 500 million), a three- higher oil prices and increased private demand. year, US$ 2 billion IMF SBA program in 2013, and Meanwhile, current transfers and capital inflows an energy and water sector DPL (US$ 250 million) are anticipated to remain sluggish given subdued in 2015. As such, the economy will likely remain growth forecasted in the GCC economies. dependent on its international allies for financing, short of which financial and economic stability 25. Fiscal consolidation will continue to would be compromised. In order to ensure financial focus on revenue-enhancing and expenditure- and economic stability, Jordan needs to embark on 22 | Prospects JORDAN ECONOMIC MONITOR | TOWARDS STRONGER EXTERNAL TRADE PERFORMANCE a sustainable equitable growth and job creation path which necessitates an “expanding the pie” given the country’s limited resources. 27. Macroeconomic resiliency can be enhanced and growth potential elevated via diversification and expansion of Jordan’s export sector. The reopening of trade routes with Iraq bodes well in improving consumption and investment sentiments. However, given that the Jordanian economy is outward looking and geared to supporting markets in GCC, Syria and Iraq, the regional downturn will continue to negatively affect the economy. If, on the other hand, Jordan pursues policies that help boost exports and move them up the value chain, then this would mitigate the large trade deficit, which is a principal source for the balance of payments stresses. This can also generate much needed high-skilled jobs for a relatively young and educated demography that faces high unemployment and lack of job opportunities that exacerbate social tensions. To gauge Jordan’s exporting aptitude, the proceeding Special Focus undertakes an assessment that quantifies the potential for enhancing exports, in quantity and quality, in the industrial, apparel and agricultural sectors. Prospects | 23 THE WORLD BANK SPECIAL FOCUS six years. Syrians now make up 14.4 percent of ANALYSIS OF EXPORT population and 20 percent19 of Jordanians.20 DIVERSIFICATION 29. On February 4th, 2016 at the Supporting Syria and the Region Conference in London21, STRATEGIES18 Jordan pledged to provide employment to nearly 200,000 Syrians in different sectors of the In attempt to enhance its exports, in quantity economy that are only open for non-Jordanians. and quality, Jordan has exerted efforts aimed at With youth unemployment standing at about developing the apparel sector, and more recently— 35 percent22, Jordan is facing its most pressing after the EU relaxation of rules of origin—attention challenge: the need to provide jobs in a labor market has focused on diversification in the industrial that is already struggling to accommodate the sector. Nonetheless, agricultural products and numbers of economically active individuals entering minerals continue to be at the forefront of Jordan’s the labor force every year. This entails expanding export value added. With limited resources, the and growing the economic pie by developing new government is asking what sector(s) it should market opportunities, and improving Jordan’s invest in and focus its policies on. This assessment competitiveness and attractiveness to investors. allows policy makers to evaluate the potential for enhanced exports in each of the following sectors: 30. To encourage investments and create industrial, apparel, and agricultural based on jobs in Jordan, the European Union (EU) signed a quantitative analysis of international trade data preferential trade access agreement with Jordan and qualitative data from buyers’ interviews. The in July 2016. The agreement relaxes the rules of assessment estimates that agricultural sector could origins requirements, allowing products with 30 generate four times more value added than the percent23 Jordanian content to enter the EU market studied examples for apparel or industrial exports. under a free-trade status. While such agreements However, this would require upgrading the will certainly help increase exports from Jordan, the agricultural sector in Jordan, including creating new lack of information on markets and market demand business models, as well as developing traceability places a new challenge in the hands of the Jordanian systems, services and logistics. government: sectoral prioritization to take advantage of these opportunities. Context 28. As a lower-middle-income economy with a 19 http://dos.gov.jo/dos_home_e/main/Demograghy/ population of 9.5 million, Jordan has faced severe PopulationEstimates2016.pdf challenges with the massive influx of Syrians who 20 Source: Government of Jordan. have taken refuge in the country over the past 21 https://www.supportingsyria2016.com/ 22 The World Bank Data Indicators, Unemployment, youth total (% of total labor force ages 15-24) (modeled ILO estimate), 18 This Special Focus was authored by Emiliano Duch (Lead 2016. Private Sector Specialist), Meriem Ait Ali Slimane (Private Sector Specialist) and Anoud Allouzi (Private Sector Development 23 http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=C Consultant). ELEX:22016D1436&from=EN 24 | Special Focus JORDAN ECONOMIC MONITOR | TOWARDS STRONGER EXTERNAL TRADE PERFORMANCE Foreign Markets Analysis Regional (GCC) and EU UPGRADING of DIVERSIFICATION Products from of Products and/or Existing Value Chains Markets FIGURE 27. …Approach to Comparative Analysis for Jordan's Exports and Markets agricultural products have been assessed for the Diversification and GCC market in first stage and to EU after, as a comparator to industrial products. Upgrading Rapid 33. The objective is to provide decision makers Assessment with a gauge of each sector’s potential exports in terms of domestic value added. While there 31. World Bank staff conducted a is no “one size fits all” approach for such analysis, Diversification and Upgrading Rapid Assessment this upgrading and diversification assessment used (DURA) to provide Jordanian policy makers the methodology illustrated in Figure 27 below, with a mean to compare the export potential of addressing first the potential growth in quality and the different sectors under consideration. The therefore higher unit prices in existing products, and assessment estimates the domestic value added the diversification into other markets and products. (DVA) that potential exports would contribute to the Jordanian economy. The results are not intended to provide an absolute number of potential exports, but to allow the comparison across different options, using similar scenarios. The assessment Industrial Sectors and relied on international trade data analysis, as well as field investigation that consisted of interviews and Apparel observations to validate the results. 34. The assessment collects data and analyzes the potential for 24 industrial products, existing as well as new, and their potential to penetrate the EU market. The products were identified as Methodology “potential wins” by several governmental entities and international organizations. The sectors 32. To gauge Jordan export potential over include plastics and articles thereof, machinery and the next 5 years, DURA was comprised of (i) an mechanical appliances, electrical and electronic export market demand assessment for existing equipment, chemicals, etc. The assessment is driven or new products; and (ii) a comparison with peer mostly by looking at market demand to forecast the exporters to formulate assumptions. Sectorally, potential export supply that Jordan can achieve by industrial products and apparel have been assessed following the below-mentioned steps: for their export potential to EU markets, while Special Focus | 25 THE WORLD BANK • Analyzing the market for EU global imports— backward (percent)24 to Egypt, as a proxy for What is the size of the opportunity? The Jordan’s domestic value added per sector. assessment first analyzes EU global imports • Calculating the potential export that Jordan of certain products to evaluate their overall could achieve per year in the next five years— market opportunity, and then takes this further What could Jordan achieve in 5 years? The by netting out intra EU trade, focusing on EU calculations for Jordan’s potential exports are imports originating from outside of the EU. This based on the assumption that the Jordanian step is done to give Jordanian policy makers a companies have achieved competitiveness parity macro picture of potential trade links with the with peers, such as Israel or Turkey, that have markets in Europe. been already present in the European market for • Evaluating the current EU market penetration many years.25 by “peer countries”—Turkey and Israel— How existing players benefit from that opportunity? The assessment looks at exports of Turkey and Israel to the European Union Agricultural Sector to have a better estimate of Jordan’s possible market penetration of the EU. The authors are 35. The analysis for Jordan’s potential fully aware of the differences between the two increase of agricultural exports takes into account countries and Jordan, which include but are not water shortage in Jordan. For this reason, the limited to the following: productivity rates, level analysis focused on how the country could increase of product sophistication, agreements between the agricultural sector share of the GDP with zero them and the EU, and experience in the market. increase in water consumption. Currently, the Nonetheless, figures from “peer countries” agricultural sector makes up about 3.4 percent of were used to give policy makers a more realistic Jordan’s GDP. The analysis focuses on the potential assumption of the future of Jordan’s products in Jordan has for increasing its exports of fresh produce, the EU market assuming it could reach a stage such as fruits and vegetables, by: a) enhancing where it can compete in quality and price. quality, and b) increasing volume. The calculations • Calculating EU’s current imports from Jordan— were done for nine products as follows: How much is Jordan already benefiting? This step considers two trade channels for Jordan: • Step 1: Capture the existing quality demand in First, Jordan’s global exports of the 24 items the Gulf countries. The first step examines the studied in this assessment, and second, Jordan’s GCC market (Saudi Arabia, UAE, Oman, Kuwait, EU exports of these products. Analyzing this Qatar and Bahrain), by assessing its demand for helps policy maker understand Jordan’s current fresh fruits and vegetables at the average import capacity and potential. price for each GCC country. By understanding • Measuring domestic value added of exports— GCC quantity and quality demand of fresh What does Jordan need to import in order produce from countries other than Jordan, to produce those exports? To understand the we were able to quantify the opportunity lost value added to the Jordanian economy of certain for Jordan by not meeting the quality demand exports, the assessment looks at the domestic that other countries are supplying to the GCC value added versus the foreign value added (i.e. countries. The value of Jordanian fresh exports the foreign imported content of the export). Due 24 This indicator helps determine the imported intermediate to data limitations for Jordan, the authors used inputs used for exports. The World Bank World Integrated the total value added share in gross exports Solution has this indicator calculated for Egypt, but not for Jordan. Nonetheless, Jordan is expected to have a similar number to that of Egypt, if not lower. 25 This is an upper limit scenario; a more moderate scenario consideration is advised. Nonetheless, the authors used estimated numbers to reveal the potential that Jordan has in the industrial and apparel sectors, even in optimistic scenarios. 26 | Special Focus JORDAN ECONOMIC MONITOR | TOWARDS STRONGER EXTERNAL TRADE PERFORMANCE Table 2. Empirical Results of the Rapid Assessment. Potential Increased export Necessary Increased Potential Net Export Diversification Potential Value/Year Import of inputs Value by sector New Manufactures to EU US$ 469.0m US$ 237.6m 59 US$ 231.4m 17 percent Increased Apparel to EU US$ 1,420.0m US$ 1,193.0m US$ 227.0m 17 percent Upgraded Agriculture to US$ 1,009.0m US$ 116.6m US$ 892.4m 66 percent GCC and EU Total 3.75 48 US$ 1,350.8m 0.8 Source: Authors’ calculations based on 2010/11 HIES. is diminished due to the lack of proper handling, yield in production, accompanied by all the packaging, refrigeration and slow and damaging improvements of post-harvesting, cold chain border inspections. This is compared to the use logistics and marketing of Step 1, could be of air transport by Jordan’s competitors. With absorbed by the constant increase in demand improved quality and competitive pricing, due for fresh fruits and vegetables in the Gulf and to lower cost of logistics, Jordan could capture Europe. an increased share of value of GCC’s agricultural imports (replacing higher value products with the same volumes). • Step 2: Transform all of Jordan’s fresh Results horticulture exports to quality level. This step calculates Jordan’s export potential for nine 36. The results show that potential horticulture fresh fruits and vegetables once it becomes a exports could generate 4 times more DVA than quality supplier for these exports. This assumes industrial or apparel exports would. Table 2 below that quality demand is increasing in the Gulf summarizes the main empirical results found by countries. While the Gulf market may not be this rapid assessment. The figures clearly reveal that willing to pay a higher quality price, nonetheless, potential fresh agricultural exports could create four by achieving a successful penetration of the times more net export value than potential apparel Gulf market and competing with produce from and industrial exports to Europe. European countries, the reputation of Jordanian products will enable them to penetrate other markets such as the EU and Eastern European countries, including Russia. • Step 3: Increase production and target other markets in Europe and Russia. Investing in desalination plants26 and applying water desalination technology for agriculture, especially for high value crops, could help increase Jordan’s production by 30 percent. Investing in other techniques such as hydroponics will also lead to an increase in production. This 26 These are not sea-water desalination plants, instead they are small filtering units for reducing the salinity of the underground water and therefore increase the efficiency of fertilizers, obtaining higher yields, for example, some local farms already have yield increase of 30-50% (Source: Authors visits to farms in the Jordan Valley). Special Focus | 27 THE WORLD BANK Air Conditioners Refrigerators US Million US Million Jordan export $6,910 Jordan export potential: $5,000 $4,640 potential: $5,000 current world $4,500 reaching the best $4,500 exports $4,000 peer exporter $4,000 $4,540 $3,500 $2,934 $3,500 $3,000 $3,000 $2,500 $2,500 $2,000 $1,706 $2,000 $2,370 $1,500 $1,500 $1,000 $1,000 $567 $500 $16 $4 $81 $0.08 $500 $7 $31 $0.11 0 0 Top 3 EU Imports Imports Turkey Israel Jordan Jordan Top 3 EU Imports Imports Turkey Israel Jordan Jordan markets From From (Peer) (Peer) World Exports to markets From From (Peer) (Peer) World Exports to Total Europe outside of Exports to Exports to Exports Europe Total Europe outside of Exports to Exports to Exports Europe Imports Europe Europe Europe Imports Europe Europe Europe Household Washing Machines Co-Axial cable and other Co-Axial Electric Conductors US Million $3,000 Jordan export US Million Jordan export $2,563 potential: potential: $2,500 current world $900 reaching the best exports $766 $800 peer exporter $2,000 $1,856 $700 $600 $1,500 $500 $414 $1,000 $400 $352 $707 $300 $500 $407 $200 $123 $0 $9 $0.05 $100 $20 $7 $0.00 0 $0 Top 3 EU Imports Imports Turkey Israel Jordan Jordan Top 3 EU Imports Imports Turkey Israel Jordan Jordan markets From From (Peer) (Peer) World Exports to markets From From (Peer) (Peer) World Exports to Total Europe outside of Exports to Exports to Exports Europe Total Europe outside of Exports to Exports to Exports Europe Imports Europe Europe Europe Imports Europe Europe Europe FIGURE 28. Comparative Analysis for Specific Industrial Products. 38. For example, in the case of refrigerators, we Industrial products to the looked at the top three importers of refrigerators in EU (Germany, France and the United Kingdom). EU Almost 66 percent of their imports of refrigerators are from within Europe. Since the value of Jordan’s 37. Jordan’s potential exports to the largest exports of refrigerators to Europe is only US$ 0.11 markets27 in the EU have been estimated to million, we looked at Jordan’s peer countries and reach US$ 469 million per year in five years. The their exports of refrigerators to Europe, Turkey’s numbers were calculated based on two scenarios: exports of refrigerators to the top three EU importers a) the exports of those products by peer countries is US$ 567 million, while Israel’s exports reached (Turkey and Israel); and b) Jordan’s current exports US$ 7 million (Figure 28). Nonetheless, Jordan to the world of those products. The more “moderate” exports US$ 31 million worth of refrigerators to the scenario of these two was chosen as Jordan’s world. It would be unrealistic to assume that Jordan potential. The export value of US$ 469 million could reach the relatively high level of Turkey’s consists of US$ 237.6 million imported content. exports of refrigerators. Due to this, in this scenario, Thus, a potential of US$ 231.4 million domestic the authors assumed that Jordan could double value added per year in five years would be available its world exports of refrigerators, and export to for domestic inputs, salaries, profits and taxes. Europe US$ 31 million worth of refrigerators. The imported content of exported refrigerators is almost 48 percent28 (if not higher). This means that the 28 The World Bank World Integrated Solution, Export of Value 27 The calculations are based on the top 3 importer countries added Database by Indicator, Total value added share in gross for each product. Data is derived from UNComtrade, 2016. exports bwd (%) of Machinery and equipment, 2011. 28 | Special Focus JORDAN ECONOMIC MONITOR | TOWARDS STRONGER EXTERNAL TRADE PERFORMANCE Apparel: Net Export Potential of 227M by Doubling Total Exports Jordan currently exports a small amount ($66.3 million) of apparel to Europe. US Millions Peer countries, such as Turkey and Israel are $35,000 $31,800 exporting $31,800 million and $1,200 million respectively to the world. $30,000 Assuming that Jordan could compete in $25,000 quality and price to sell to Europe, an optimistic scenario could be to double its $20,000 present total exports to $1,420 million. This will require additional import content of $15,000 exports of $1,193 million. Thus a potential of $227 million of net exports to the EU. $10,000 $5,000 $1,200 $1,420 $1,193 $- Turkey (Peer) Israel (Peer) Jordan Total Jordan Import World Exports World Exports World Exports Content of Exports FIGURE 29. Export Potential for Apparels. Source: Atlas Media, MIT 2014 - World Integrated Trade Solution (WITS), 2011 net value that Jordan could reach from doubling its current exports of refrigerators to penetrate the EU Agricultural Sector market is almost US$ 16 million. 40. While the assessment looked at the agricultural potential for nine agricultural products, this section focuses on one of Jordan’s main horticulture and leading exports: Tomatoes. Apparel Currently, Jordan is exporting US$ 300 million31 worth of tomatoes, mostly to Gulf countries. Despite 39. In this scenario, the authors assume that a reputation for good taste and rich flavor, Jordanian Jordan will have the capacity to double its total tomatoes in the GCC are sold at a price lower exports of apparel within the next five years and than those imported from several other countries. increase its exports to the EU from US$ 63 million A closer look reveals that the quality of tomatoes to US$ 1.42 billion. Jordan’s annual exports of being sold is not up to the standards of imports apparel reaches almost US$ 1.42 billion29. However, from other countries. A box of tomatoes from Jordan given that 84 percent30 of the material used in comes with a mix of different qualities, referred to as apparel exports are imported contents, even with grades—grade A, ranks the highest quality, followed the optimistic assumption of penetrating the EU by grade B and then C—disappointing traders with markets with US$ 1.42 billion worth of apparel, the expectations of grades A and B. The lack of proper figures reveal that the net export potential for Jordan cold chain and poor handling techniques of the will be US$ 227 million (Figure 29). tomatoes from the time of harvest to the time of its export leads to the degradation in its quality, which places Jordanian tomatoes in a lower segment. This 29 Atlas Media, MIT, Jordan, 2015. leads to Jordanian tomatoes being sold at a lower 30 The percentage was calculated from data derived from value. Atlas Media, MIT 2015. Apparel, in general, has the highest shares of intermediates imports embodied in exports (OECD, Trade in Value Added: China, 2015). 31 UNComtrade Database, Jordan, 2015. Special Focus | 29 THE WORLD BANK Conclusions and Agricultural Products: Upgrading Potential in Regional Markets Zoom on Tomatoes US Millions $1,000 $993 Limitations $800 $730 44. The DURA allows Jordan’s policymakers $600 to assess and put in perspective their options. $400 $301 $321 This is despite it being a rapid assessment limited in $200 time and scope. As such, it generates “thick brush” $0 Current Value Step 1 Step 2 Step 3 figures of the impact for Jordan for the different diversification options that are being considered by FIGURE 30. Export Potential for Produce. the Government of Jordan, which has been reflected in Table 2. Scenarios with no additional water consumption Jordan's present exports of tomatoes to the Gulf Countries are $301 million. 45. Even with no increase in water use the Step 1: a proper cold chain could allow to capture $20 million more results of this assessment reveal the untapped value from competitors* Step 2: exporting all present volume at higher quality price would potential of the agricultural sector in Jordan. With almost double to $730 million Step 3: using better growing techniques** and increasing volume proper traceability, post-harvest handling, including could reach $993 million. cold chain logistics, and advanced agricultural * Competitors use (expensive) air cargo to export to GCC and could be replaced by Jordanian higher quality tomatoes. techniques, agricultural sector’s contribution to GDP ** Desalination (mitigates the water constraint) and hydroponics could increase, helping to bolster economic growth increase yield by 30 percent. and job creation for both Jordanians and Syrian refugees living in Jordan. Developing the agricultural 41. Results of step one: By installing proper sector in Jordan will not only increase jobs in farms, post-harvest techniques, proper traceability and but also increase employment in sectors linked to modern cold chain logistics Jordan could replace farming such as transport, processing, logistics existing quality demand of tomatoes in the GCC handling, packaging and marketing. valued at US$ 20 million. 46. Achieving an upgrade in Jordan’s 42. Results of step two: If Jordan starts exporting agricultural sector requires a more comprehensive at the average value of higher quality tomatoes, the analysis to understand the economic, value of its total exports of tomatoes would almost environmental and social feasibility of increased double to reach US$ 730 million. exports of perishables. Such analyses are beyond the scope of a DURA, but are critical before any 43. Results of step three: Hydroponic farming32 policy intervention. could create additional channels for tomato production and increase Jordan’s outputs of tomatoes 47. From an economic feasibility aspect, to reach a value of US$ 993 million (Figure 30). the results of this assessment should be complemented with seasonal breakdown of market demand (month by month) of fresh fruits and vegetables. Monthly analysis will help understand the seasonal patterns of production of certain fruits and vegetables, their price fluctuations and the market window within which Jordanian products could compete. Other financial factors, such as Jordan’s cost of transportation (via land, sea and air) of perishables in comparison to its 32 Hydroponic Green Farming Initiative Program, EcoConsult- competitors and the productivity rate of Jordanian USAID. 2016 30 | Special Focus JORDAN ECONOMIC MONITOR | TOWARDS STRONGER EXTERNAL TRADE PERFORMANCE labor, are important to analyze to gain a holistic 51. Investing in the agricultural sector in understanding of Jordan’s current position. Jordan could help expand the economic pie and create job opportunities for Jordanians and 48. It is also crucial to evaluate various Syrian refugees in farms and several sectors investments needed for Jordan to achieve a linked to farming. Policy makers should tackle successful and competitive agribusiness value the impediments that the agricultural sector is chain. Examples are investments in desalination facing to help unleash its potential and increase its plants, hydroponic systems as well cold chain contribution to the country’s GDP. logistics. A cost-benefit analysis for such investments, which involve calculating their returns, is thus 52. The DURA has revealed that integrating imperative. Jordan into a modern, fresh, logistical, regional and global value chain could help expand the 49. For the environmental feasibility, a economic pie and create job opportunities for sustainability analysis is needed to understand Jordanians and Syrian refugees in farms and in the long-term impact of the agribusiness value advanced services sectors supporting them. But chain on water resources. Toward that end, creative more importantly, the Connectedness (improved solutions might be needed to make optimal use of logistics, reduced trade restrictions and trade in scarce natural resources. As we mentioned earlier logistics services), the Capabilities (new skills, in this study, the final figures of Jordan’s potential new technologies, increased digital readiness) for agricultural sector potential exports takes into and Competitiveness (new business models and consideration the water scarcity issue. As such, the increased productivity), are the three pillars that suggested scenarios do not require any increase in can help Jordan prepare for the 4th Industrial water consumption. Revolution33. 50. From a social feasibility point, it is necessary to assess the impact of the investment on creating job opportunities. This requires a gauge of interest by Jordanians and Syrian refugees to work in the agricultural sector, including working in farms as well as other related activities in the value chain. There also needs to be an assessment on inclusiveness of the value chain in the agricultural sector and its integration of women, refugees and poor communities. Additionally, a social impact assessment should be undertaken on the communities surrounding the areas where farms, collection points and logistics facilities are located. 33 Hallward-Driemeier, Mary, and Gaurav Nayyar. 2017. “Trouble in the Making? The Future of Manufacturing-Led Development.” Conference Edition. World Bank, Washington, DC. Special Focus | 31 THE WORLD BANK DATA APPENDIX TABLE 14. Selected Economic Indicators. 2014 2015 2016 2017 2018 2019 Act. Act. Act. Proj. Proj. Proj. Real sector (annual percentage change, unless otherwise specified) Real GDP 3.1 2.4 2.0 2.1 2.2 2.4 Real GDP per Capita -1.5 -1.5 -1.2 -0.5 0.1 0.7 Agriculture (share of GDP) 3.3 3.3 3.4 3.4 3.4 3.3 Industry (share of GDP) 25.2 25.2 24.9 24.8 24.8 24.9 Services (share of GDP) 55.8 50.0 56.3 56.4 56.4 56.3 Net taxes (share of GDP) 15.7 15.6 15.4 15.4 15.4 15.5 Money and prices (annual percentage change, unless otherwise specified) CPI Inflation (p.a.) 2.9 -0.9 -0.8 3.1 1.9 2.1 Money (M2) 7.1 8.1 4.0 3.4 3.1 3.7 Investment & saving Total Investment 28.0 24.1 22.1 22.0 22.2 22.5 Gross National Savings 20.7 15.0 12.5 13.2 13.5 13.9 Government finance (percentage of GDP, unless otherwise specified) Total revenues and grants 28.6 25.5 25.8 25.8 25.6 25.1 Domestic Revenue (excluding grants and privatisation) 23.7 22.2 22.7 22.8 23.2 23.5 o/w. tax revenue 15.9 15.4 15.5 15.2 15.9 16.2 Foreign Grants 4.9 3.3 3.0 2.9 2.4 1.7 Total expenditure and net lending 37.9 29.1 29.0 29.2 29.6 30.0 Current1 33.4 24.9 25.2 25.4 25.9 26.4 o/w wages and salaries 4.9 4.7 4.6 4.5 4.4 4.4 o/w interest payment 3.6 3.4 3.0 3.1 3.4 3.4 o/w Transfer to utilities (NEPCO and WAJ) 7.0 0.1 0.0 0.0 0.0 0.0 Capital & Net Lending 4.5 4.1 3.8 3.9 3.6 3.6 Overall balance (deficit (-), excl. grants)2 -14.2 -6.9 -6.2 -6.4 -4.8 -3.5 Overall balance (deficit (-), incl. grants)2 -9.3 -3.6 -3.2 -3.4 -2.4 -1.9 Primary Balance (deficit (-), excl. grants)2 -10.5 -3.4 -3.2 -3.3 -1.5 -0.1 Primary Balance (deficit (-), incl. grants)2 -5.7 -0.12 -0.2 -0.4 0.9 1.6 External sector (percentage of GDP, unless otherwise specified) Current Account -7.3 -9.1 -9.5 -8.8 -8.7 -8.6 Net Exports -26.4 -22.9 -21.0 -20.3 -20.2 -20.1 Export FOB 43.3 37.6 35.1 36.9 38.8 39.8 Import FOB 69.7 60.5 56.2 57.2 59.0 59.9 Net Income and transfers 19.1 13.8 11.5 11.5 11.4 11.5 Net Private Investments (FDI and Portfolio) 9.1 7.7 7.1 7.0 6.9 6.8 Foreign Currency Reserves (US$ Millions) 14,079 14,153 12,883 12,585 13,345 14,105 Foreign Currency Reserves3/ (Months of Imports GNFS4/, exclud- 7.1 7.8 7.6 7.0 7.0 7.0 ing re-exports5/) Total Debt (in million US$, unless otherwise specified) Total Debt Stock 31,984 35,126 36,843 38,835 40,556 42,169 Debt to GDP Ratio (%)6/ 89.0 93.4 95.1 97.0 98.1 97.9 Memorandum Items: Nominal GDP (Billion JD) 25.4 26.6 27.4 28.4 29.3 30.5 GDP (in million US$) 35,917 37,612 38,752 … … … Source: Government Data and World Bank Staff Calculation. 1/ Includes adjustment to other receivables for 2012 (0.4% of GDP) and transfers to NEPCO and WAJ. As of 2015, NEPCO and WAJ reverted to government-guar- anteed borrowing from commercial banks. The government transferred 0.1% of GDP to WAJ in 2015. 2/ Includes fiscal gap of 1.5% of GDP in 2018 and 3.0% of GDP in 2019. 3/ Reserves exclude bank deposits in foreign currencies. 4/ GNFS: Goods and Non-Factor Services. 5/ As of January 2017, coverage ratio calculation for the series deducts re-exports from imports. 6/ Government and guaranteed gross debt. Includes WAJ estimated borrowing for 2017-2019. 32 | Data Appendix JORDAN ECONOMIC MONITOR | TOWARDS STRONGER EXTERNAL TRADE PERFORMANCE SELECTED RECENT WORLD BANK PUBLICATIONS ON JORDAN (for an exhaustive-e list, please go to: http://www.worldbank.org/en/country/jordan/research) Title Publication Date Document Type Optimal Targeting Under Budget Constraints in a Humanitarian Context 2017/09/12 Working Paper The Last Mile to Quality Service 2017/06/12 Working Paper Jordan Economic Monitor, Spring 2017: The Green Economic Boost 2017/06/01 Report Queen Alia International Airport: The Role of IFC in Facilitating Private 2017/04/20 Brief Investment in a Large Airport Project Appraisal Integrated Safeguards Data Sheet (Concept Stage) – Jordan 2017/04/19 Project Appraisal Document Integrated Social Services for Vulnerable Youth Data Sheet Tafila Region Wind Power Projects: Cumulative Effects Assessment 2017/03/01 Working Paper Jordan - Program for International Student Assessment 2015 2016/12/15 Brief Jordan - Second Programmatic Energy and Water Sector Reforms 2016/12/01 Loans & Credits Development Policy Loan Jordan Economic Monitor, Fall 2016: Reviving a Slowing Economy 2016/11/24 Report European Investment Bank & World Bank Group Partner to Support 2016/10/17 Press Release Entrepreneurs in the Middle East & North Africa Economic and Social Inclusion Helps Prevent Violent Extremism and 2016/10/5 Press Release Contribute to Growth in the Middle East and North Africa Jordan’s Economic Outlook - Fall 2016 2016/10/3 Publication Does Improved Local Supply of Schooling Enhance Intergenerational Mobility 2016/09/15 Working Paper in Education? Evidence from Jordan Jordan Economic Monitor, Spring 2016: The Challenge Ahead 2016/05/01 Report Jordan - As-Samra Wastewater Plant Expansion 2016/05/01 Brief Jordan - Queen Alia Airport 2016/04/07 Brief Jordan - Tafila Wind Farm 2016/04/06 Brief The Cost of Irrigation Water in the Jordan Valley 2016/04/01 Working Paper Learning or Leaning: Persistent and Transitory Spillovers from FDI 2016/03/02 Working Paper The Welfare of Syrian Refugees: Evidence from Jordan and Lebanon 2015/12/22 Publication Jordan Economic Monitor, Fall 2015: A Hiccup Amidst Sustained Resilience 2015/10/01 Report and Committed Reforms Jordan - Developing an Efficient Public Investment Management System 2015/10/01 Brief Selected Recent World Bank Publications on Jordan | 33 0.9375 cm The World Bank www.worldbank.org/jo