Jordan's Central Bank Governor Anticipates Growth Exceeding 4% in the Medium Term Thanks to Government Investment-Supportive Reforms

SadaNews - The Governor of the Central Bank of Jordan, Dr. Adel Sharkas, has confirmed that the national economy continues to grow steadily, despite geopolitical challenges and the complex regional conditions, based on a comprehensive reform vision for economic modernization that has reshaped the philosophy of economic reform in the Kingdom.
 

Sharkas stated that the economy achieved quarterly growth rates higher than expected, despite the ongoing war in the Gaza Strip, reaching 2.7 percent for both the last quarter of 2024 and the first quarter of this year, driven by a broad and diverse base of economic sectors.

This was stated during a dialogue session organized by the Jordanian Strategies Forum, titled: "Reform, Stability, and Resilience: The Triad of the National Economy in a Changing World."

He emphasized that the Central Bank's estimates point to a growth rate of 2.7 percent during the current year, and that it is expected to exceed 4 percent in the medium term by 2028, driven by the implementation of major strategic infrastructure projects stemming from the economic modernization vision that establishes sustainable economic growth for the coming years, alongside continued efforts in financial and structural reforms.

Sharkas noted that the world is witnessing rapid transformations, which demand a stable environment and recurring waves of uncertainty, necessitating the enhancement of economic resilience and strengthening partnership with the private sector to ensure economic stability and achieve sustainable growth.

He confirmed that the national economy today enjoys factors of resilience and immunity that enable it to confidently withstand various challenges, supported by a stable investment environment, strong institutions and governance, a robust monetary and financial framework, a reliable exchange rate system, a sound banking sector, and the existence of a reform plan with a clear vision, which has bolstered the confidence of international financial markets and investors in the national economic environment.

One of the indicators of this growing confidence is clearly reflected in the performance of Jordanian Eurobonds, which are currently trading in global financial markets at yields below issuance yields, reflecting the positive market assessment of the national economy's viability, creditworthiness, and firm commitment to the reform agenda.

He explained that the national economy achieved an average economic growth of 2.9 percent during the period 2021-2024, the highest compared to previous periods since 2010, noting that this period of highest growth was based on an improvement in the overall productivity of production factors, supported by technological developments and human capital development, which contributed to enhancing potential output and leading to a qualitative shift in the structure of economic growth towards more sustainable and expansive sources.

He indicated that investment played a pivotal role in this growth, accounting for approximately 40 percent during the period 2021-2024, after having a negative contribution to growth during the previous decade (2010-2020), while the contribution of the external sector reached 38 percent.

He emphasized that this growth did not occur by coincidence; rather, it resulted from a continuous and gradual path of deep macroeconomic and structural reforms implemented by the government, including nearly 100 economic reforms since 2012, according to International Monetary Fund reports. These reforms covered various areas to enhance the efficiency of policies, governance, the business environment, increase competitiveness, and provide job opportunities, further improving the positive outlook of credit rating agencies towards the national economy.

He stated that national exports were able to penetrate new markets, contributing to expanding the export base and raising its value to record levels since 2022, which coincided with a gradual shift in the structure of exports towards non-traditional exports, increasing their contribution to GDP to 20.9 percent in 2024, compared to 16.2 percent in 2016.

He pointed out that diversifying the energy mix and long-term gas agreements contributed to reducing the energy bill to a third of what it was in 2012, reaching about 7 percent of GDP in 2024, which helped mitigate the negative impacts of rising oil prices on the national economy.

Despite a slight decline in tourism income last June, it recorded a growth of 11.9 percent during the first half of the year, reaching 3.7 billion dollars, noting that the pace of recovery could have been faster were it not for the Israeli-Iranian conflict in June, and he expects tourism income to reach 7.7 billion dollars with a growth rate of 6 percent by 2025.

Sharkas clarified that the Kingdom attracted foreign investments of about 1.6 billion dollars during 2024, reviewing the map of foreign investment balances in the Kingdom, distributed by governorates.

He indicated that remittances from Jordanians working abroad recorded a growth of 2.8 percent last year, reaching 3.6 billion dollars, expecting that they will rise to 3.7 billion this year, which enhances foreign currency inflows, supports domestic demand, and contributes to the stability of the balance of payments.

He pointed out that the Central Bank's prudent monetary policy, alongside ongoing government measures, contributed to containing global inflationary pressures to about 2 percent during the first half of this year, a level that enhances the competitiveness of the national economy and maintains the purchasing power of citizens, expecting it to remain around this level until 2025.

He affirmed that the Jordanian dinar is strong and consistent with macroeconomic fundamentals, supported by a comfortable level of foreign reserves, which reached 22 billion dollars at the end of last June, enough to cover 8.4 months of the Kingdom's imports of goods and services.

He mentioned that financial stability indicators reflect the strength of the banking sector and its ability to withstand shocks, enjoying comfortable levels of legal liquidity and high levels of capital adequacy, noting that the growing confidence in the banking sector is reflected in the continuous increase in the volume of deposits, which reached 47.7 billion dinars at the end of May, along with a decrease in the dollarization rate to 18.1 percent at the end of May.

He indicated that financial inclusion in the Kingdom rose to 43.1 percent in 2022, while the gender gap decreased from 53 percent to 22 percent, aiming to raise the financial inclusion rate to 65 percent and reduce the gender gap to 12 percent by the end of 2028, as part of the national strategy for financial inclusion 2023-2028.

He pointed out that the number of transactions executed via digital payment systems (E-Fawateercom, Click, and Jumobi), and payment cards, reached 537.9 million transactions with a value of 55.3 billion dinars in 2024, accounting for 146 percent of GDP, compared to 129.4 million transactions valued at 21.5 billion dinars in 2019.

He confirmed that banks play a pivotal role in supporting economic activity by providing credit facilities, which have increased by more than 7 billion dinars since 2020, reaching 35.3 billion dinars at the end of May.

He stated that the Central Bank has completed all seven of its initiatives under the first executive program of the economic modernization vision 2023-2025, having completed 90 activities out of 94, noting that the remaining four activities are proceeding according to the planned executive path until the end of this year.

Sharkas pointed out that efforts to regulate public finances are progressing, with expectations of a decline in the primary deficit of the central government to 2.0 percent of GDP during 2025, as part of the effort to achieve a primary surplus by 2027.

He mentioned that the government will continue its strong commitment to controlling public debt through a sustainable downward trajectory in the medium term, aiming to reduce the debt-to-GDP ratio to less than 80 percent by the end of 2028, which is one of the essential goals within the framework of the current extended Fund facility program 2024-2027.

For his part, the head of the administrative body of the Jordanian Strategies Forum, Sharif Fares Sharaf, indicated that the current economic phase, amid the rapid changes the world is experiencing, presents Jordan with a dual challenge of maintaining monetary and financial stability on one hand, and enhancing the flexibility of economic policies on the other.

He explained that monetary stability forms a solid foundation upon which to build a more adaptable economic system that is more attractive for investment, which necessitates rethinking economic policy tools to ensure the Jordanian economy's readiness to handle future risks and opportunities with flexibility and efficiency.

He emphasized that constructive dialogue between the public and private sectors is more important than ever, as it is fundamental to crafting effective responses to challenges and achieving comprehensive and sustainable economic development.

For her part, the executive director of the forum, Nasreen Barakat, indicated that this meeting comes at a time when there is an increasing need for integration among stakeholders, as the forum continues to organize strategic sessions and provide analytical studies and evidence-based research, contributing to enhancing consensus around future economic trends and formulating effective and sustainable policies.

On her part, the member of the administrative body and facilitator of the dialogue in the session, Nadia Al-Saeed, affirmed the importance of the organizational and regulatory role of the Central Bank in enhancing the efficiency of the banking sector and supporting the developmental process.

The dialogue addressed several axes, including the proposed law governing dealings in virtual assets, ways to incentivize small and medium-sized enterprises, the importance of enhancing economic awareness, in addition to discussing the reality of the Jordanian economy and its resilience in facing external challenges.