Predicting Jordan’s economic future | Jordan Press | Ammon News

Predicting Jordan’s economic future

[1/28/2013 12:00:00 AM]

by Fahed Fanek/ The Jordan Times

As a starting point, economic planners need to have a numerical map depicting the economic indicators expected in the country during the coming few years. The map would help them see the big picture of the economy, with its positive and negative points, and help them deal with and try to influence these indicators, to move in the desired direction, to achieve a set of objectives.

The economic adjustment programme agreed upon recently with the International Monetary Fund (IMF) came up with indicators covering the next five years 2013-2017. It did not say whether these figures and percentages represent neutral expectations or stated objectives. The assumption is that they are only preliminary figures that could serve as a basis for policies to be adopted and decisions to be taken.

It is extremely important for such expectations to be realistic, as much depends on them in the preparation of annual budgets. They should be neither extremely optimistic nor overly pessimistic.

Looking at the tables contained in the agreement between the government and the IMF, it can be noted that some expectations are based on the best-case scenario, which makes it very difficult to see it actually fulfilled.

The tables indicate, for example, that exports will grow during the coming five years at rather high rates and that imports will grow at a low percentage. This way, the trade deficit can be substantially reduced, but only on paper.

Also, the trade deficit hardly rises in absolute figures. It will decrease as a percentage of the gross domestic product, a trend that never happened before. Lower trade deficit is good as a target that may be achieved in full or in part, but it is not good as a prediction, because it may lead the planners and decision makers to believe that the problem is on its way to being solved without intervention.

By the same method, the deficit in the current account of the balance of payments is shown to be declining not only as a percentage of GDP but also in absolute figures.

Another sign of optimism is that the IMF assumed that the world price of the petroleum will drop each year to reach $87.6 per cent after five years, but what if the petroleum prices rise instead of decreasing?

What will happen in such a case to the remaining expectations and balances?

It would have been wiser to assume stability or moderate rises in the oil prices.

The Jordanian government is unable to predict the economic and fiscal future for one year, as evidenced by its expenditure, which exceeds the budget, and the need to issue supplementary budgets to meet unforeseen developments.

The IMF is also unable to provide convincing assumptions on the way the economy may unfold during the coming five years. Therefore, it will revise and amend its projections every six months.

However, the University of Jordan announced its intention to produce a full picture of Jordan in 2030 politically, economically and socially. It will be a study project, to be carried out by its Centre for Strategic Studies and finalised in one year at the cost of JD100,000, that will be submitted to the government free of charge.

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