Jordan is a relatively small country situated at the junction of the Levantine and Arabian areas of the Middle East. Over the past seven year, attempts at macroeconomic stabilization have been successful and have been accompanied by broad economic reforms undertaken in cooperation with the International Monetary Fund. The socio-economic programme of the government from the year 2002 up to 2005 was designed to boost the national economy, focusing on education, training and human resources development. Jordan is thus embarked to the fullest on being part of the global economy.

Economic performance

The Kingdom has seen a new economic strength and a heightened level of investor confidence with real economic growth of 3,3% in 2003 and 7,4% in the first nine months of 2004. The country also witnessed a steady increase in its reserves and a reduction in external public debt as a percentage of total GDP. Public spending as a percentage of GDP has fallen due to more efficient public finance management and domestic revenues have risen on the back of greater liberalization.
Jordan's external position remained sound in 2004. The external current account was estimated to be broadly in balance, as higher imports were compensated by a pickup in exports and sharply higher transgress. The capital account indeed recorded a surplus owing to significant private inflows, including foreign direct investment. The gross reserves of the Central Bank of Jordan increased to US$ 4,38 billion at the end of 2004.
Jordan has privatized almost $ 1 billion worth of state owned assets in five years. Since the privatization process first began in 1998 with the sale of a 33 per cent government stake in the Jordan Cement Factories Company, over 55 public sector entities have been transferred to the private sector. The process has been rigorously backed by legislative reform culminating in the ratification of the Privatization Low of 2000. In recent yerar, Jordan has seen the partial divestment of major economic players, including the national telecom provider, Jordan Telecommunications Company, and is now one of the region's largest recipients of Foreign Direct Investment (FDI).
Through these efforts along with bold initiatives such as the recently established Aqaba Special Economic Zone, Jordan has attracted the interest of a string of multinational giants bringing new expertise, technology and jobs to the domestic market. Jordan is now targeting other key sectors, including mining, the power sector and postal services to maintain investor confidence and secure future capital inflows.
As a result of a series of trade agreements, Jordan has become one of the region's most integrated economies having secured WTO membership in 2000, the European Jordanian Association Agreement, which went into effect in May 2002, and a Free Trade Agreement with the US in 2001. All these build on the country's traditionally strong position as a regional trading hub and complement the earlier Arab Free Trade Area and European Free Trade Association (EFTA) agreements.
Export orientation is paying off Jordan has seen a rapid rise in exports, and a significant improvement in its trade balance. In the past four years, exports have almost doubled with trade rising to $3,55 billion in the first eleven months of 2004 compared to $ 1,90 billion in 2000. As a result of the Qualifying Industrial Zones Agreement signed with the US in 1998, exports to the US were boosted significantly from $ 13 million in 1999 to over $ 900 million in 2004. 

Future prospects

Among the development orientations highlighted by the Jordanian authorities , are information and communication technology. After its telecoms revolution, launched in 1995, the Kingdom would like its broadband infrastructures (creation of a network between the eight universities) to serve the software and multimedia industry. An ambitious plan of e-government and e-commerce accompanies this approach, which is based on the creation of incubators and centers of technological development which profit from aids and exonerations.
Other business opportunities are to be found in the aggressive policy for the liberalization of the economy. Among the projects underway is the opening of the fixed telephone sector to new operators from 1st January 2005. In certain sectors, public control still remains in a majority, which leaves the door open to the entry of private players of more or less small size, in particular in electricity, health and infrastructure.
Other opportunities for investors are stone (marble, etc.) quarrying and cosmetics using the very special resources of the Dead Sea. In addition, there are many available investment opportunities in some leading projects in the country such as the Amman Down Town (Abdali) project, pharmaceuticals and mining projects.
There is also room in agriculture, and especially in exporting world-class Jordanian olive oil. Despite an arid climate, there exists in certain areas real activity for the production of vegetables and fruits which could benefit from new investments (the law on the promotion of investments includes a series of fiscal and customs exemptions for agricultural projects). More particularly, companies specializing in packaging and refrigerated transport could find new outlets in this country which boasts of its logistics vocation. All activities linked to land, maritime and air transport are also strongly encouraged. Hence an equally large effort is noticed in the infrastructure domain.
Over the past few years, the Jordanian economy has made impressive progress spurred by global economic recovery and the continued implementation of prudent macroeconomic policies.
The main challenge facing Jordan over the medium term are the volatile external environment and continued economic reforms with a view to development of a modern competitive private sector.
Promotion of the private sector should improve quality and efficiency and calls for smooth implementation of trade liberalization and procedures.

Thanks to its multiple bilateral agreements (USA, Europe and Arab countries), Jordan has become one of the countries the most open to external trade. A location in Jordan thus opens perspectives not only towards the local market, but also towards other countries of the region, thanks to the re-export hubs that the country has set up . Alongside this privileged position, the Jordanian authorities have also encouraged investment by developing a specific offer to foreign investors within special economic zones. The special economic zone of Aqaba is for example developing around three domains of activity (tourism, services and industry) a real economic center and a concentration of the country's power.

Basic Economic and Financial Indicators, 2000-2004

Source.: Arab Economic Report, General Union of Arab Chambers of Commerce