Economic Outlook

Published October 18th, 2000 - 02:00 GMT

The SEZ project, which is due to open in January 2001, aims to establish an economic zone similar to Singapore or Dubai’s Jebel Ali. Customs will be abolished and taxes lowered to 5 percent on income and 7 percent on services and retail sales (compared to a 13 percent sales tax in the rest of the country). While the SEZ aims to allure foreign investment to the Aqaba area, several local lawmakers fear it might also deter projects from other regions of the Kingdom that lack similar concessions. Abul Ragheb, however, has insisted that investment to Aqaba will not come at the expense of other districts. He believes that 50 percent of projects will be in the tourism sector, while 30 percent will be related to auxiliary services, such as shipping. 

 

This scheme also aims to create thousands of desperately needed employment opportunities. Official statistics put the Kingdom’s unemployment rate at 15 percent, but independent analysts appraise that roughly 27 percent of Jordan’s labour force is without work. Other indicators also point to the Kingdom’s weak financial position. Jordan’s trade deficit in the first two months of this year climbed to JD213 million ($300 million) compared to JD151 million (almost $213 million) in the corresponding period of 1999. Due to high international oil prices, the budget deficit is certain to rise above 7 percent of the state’s GDP. Real GDP growth, which has lingered below 2 percent for several successive years, is projected to reach between 2-2.5 percent this year. 

 

Last year, the Kingdom's economy expanded by merely 1.89 percent, while its population grew by 3 percent. Fortunately, Jordan continues to be a beneficiary of tangible foreign aid. Early this year, the United Arab Emirates affirmed its commitment to Jordan by providing the Kingdom with a $200-million grant. These funds will be used to encourage investment projects to alleviate Jordan's excessive unemployment. The UAE’s declaration followed a $123-million aid package signed with the European Union. Over $40 million of this assistance will help export-oriented industries adjust to the challenges of globalization. 

 

After more than six years of negotiations, Jordan officially joined the World Trade Organization earlier this year. Jordan’s accession marked a step forward in its overall economic liberalization program. The Kingdom agreed to implement all pledges on opening markets for goods and services without the phase-in-period sought by most developing country applicants. 

© 2000 Mena Report (www.menareport.com)

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