IMF expects Jordan's inflation to hit almost six per cent
The International Monetary Fund (IMF) expects Jordan’s economy to grow by 3.3 per cent this year and to expand by 3.5 per cent in 2014.
Jordan’s economy grew by 2.7 per cent in 2012, according to official figures.
In its World Economic Outlook (WEO) report, released Tuesday, the IMF said that growth in Jordan has been affected by the disruption of trading routes through Syria and strikes in the mining industry.
The fund also projected inflation to go up from 4.8 per cent in 2012 to 5.9 per cent this year. However, the report predicted inflation rate in the Kingdom to ease to 3.2 per cent next year.
The IMF sees the Kingdom’s current account deficit improving in 2013 and 2014 to stand at 10 per cent and 9.1 per cent respectively. Jordan’s current account deficit was 18.1 per cent last year, according to the international financial organisation.
However, the IMF warned that downside risks remain elevated for the Middle East oil importers group, which includes Jordan, largely as the result of domestic and regional political instability and social unrest.
Several governments in the region are transitional, and continued political instability could further delay policy action to maintain macroeconomic stability and aid the recovery, the report indicated, pointing out that spillover from the conflict in Syria could spreading to neighbouring countries Jordan, Iraq and Lebanon could also affect economic stability.
The international financial body also warned that an increase in global food and fuel prices could reduce output and worsen the oil importers’ already large fiscal and external deficits.
A protracted period of slow European growth could further affect the region’s oil importers’ growth through economic linkages, including trade, tourism, remittances, and investments, the IMF report indicated.
According to the WEO, economic growth in Middle East and North Africa (MENA) oil exporting countries is expected to fall to 3.25 per cent in 2013 due to a relatively weak crude demand, after expanding by almost 5.7 per cent last year.
“But oil importing MENA countries will experience healthier growth of 2.7 per cent in 2013 compared with 1.9 per cent in 2012, though this remains weighed down by political uncertainty, decreased trade with Europe and high commodity prices,” the report indicated.
“For MENA oil exporters, 2012 was a year of robust growth, which reached about 5.75 per cent,” the IMF said.
The almost complete restoration of Libya’s oil production and strong expansion in the Gulf helped to boost this growth, the report noted.
“Economic growth is projected to fall to 3.25 per cent in 2013 as oil production growth pauses against a backdrop of relatively weak global oil demand,” it said.
MENA oil exporters include OPEC (Organisation of Petroleum Exporting Countries) heavyweight Saudi Arabia, and the other five Gulf Cooperation Council members, as well as Algeria, Libya, Iraq, Iran and Yemen.
The economy of Iran, hit by US-led sanctions over its disputed nuclear programme, will continue to contract in 2013, shrinking 1.3 per cent this year compared with 1.9 per cent in 2012, the IMF said.
Additional oil supplies from Iraq and Libya are expected to “more than offset a decline in oil exports from Iran this year,” it added, while “lower net demand for Saudi Arabian exports is expected to result in slightly reduced production”.
Non-oil gross domestic product (GDP) is expected to grow by 4.2 per cent this year, propped up by sustained high government spending, the WEO indicated.
A slight expansion is expected in 2014 with the growth rate increasing to 3.7 per cent on the back of rising non-oil GDP growth and resuming oil GDP growth.
Saudi Arabia’s economy will see a drop in growth from 6.8 per cent in 2012 to 4.4 per cent in 2013. The United Arab Emirates economy will also see a slower rate of growth of 3.1 per cent this year compared with 3.9 per cent in 2012.
Kuwait is forecast to see a sharp drop in growth from 5.1 per cent in 2012 to 1.1 per cent this year, and Qatar’s expansion will decrease from 6.6 per cent in 2012 to 5.2 per cent in 2013.
Iraq, on the other hand, will continue to widen its pace of expansion, topping its 8.4 per cent growth last year to reach 9 per cent in 2013, aided by surging oil production.
Last month the IMF predicted Iraq’s oil output would gain about 10 per cent, reaching 3.3 million barrels a day.
North African oil producer Algeria will see growth rising from 2.5 per cent last year to 3.3 per cent in 2013.
Libya’s economy has expanded by over 6 per cent, as oil pumping levels have risen close to those before the 2011 rebellion that toppled the regime of late dictator Muammar Qadhafi, the IMF said, without specifying figures.
The aggregate growth of oil importers appears to have been prompted by Sudan’s comeback from a 4.4 per cent contraction in 2012 to 1.2 per cent growth expected in 2013.
The economy in Tunisia, the cradle of Arab uprisings, is expected to register a 4 per cent growth this year, compared with 3.6 per cent in 2012, thanks to a rebound in tourism.
In Egypt, economic growth is expected to slow down to 2 per cent in 2013, compared with 2.2 per cent last year.