QNB Group has published its Jordan Economic Insight 2015. The Qatari bank reports on how the Jordanian economy continues to recover, despite a difficult regional context and a weak global economy.
- Despite a difficult geopolitical context and a weak global economy, Jordan continues to recover helped by lower oil prices, IMF support and GCC grants
- Real GDP growth is expected to accelerate to 4.0% in 2015, mainly driven by construction, mining exports as well as higher government investment; growth is projected to gather further momentum in 2016 (4.3%) and 2017 (4.5%) as economic reforms continue to bear fruit.
- Lower energy and food prices are expected to lead inflation to slow to an average 0.8% in 2015, which will more than offset the further planned increase in electricity tariffs; a projected rise in global commodity prices in 2016-17 and stronger domestic demand are expected to push inflation up to 2.0% in 2016 and 2.5% in 2017.
- The current account deficit is projected to narrow to 2.9% of GDP in 2015, primarily from lower energy prices as well as higher export growth from the mining sector; the deficit is expected to widen again in 2016 (3.9% of GDP) and in 2017 (4.7% of GDP) as energy prices rebound.
- Higher taxes and lower expenditures should further narrow the fiscal deficit in 2015 (2.1% of GDP) while net public debt is likely to gradually decline, following a peak at end of 2014 (80.3% of GDP).
- Deposit growth is likely to continue to slow in 2015 (5.2%) on lower inflation, but rebound in 2016 (6.9%) and 2017 (7.4%) on stronger economic growth and higher inflation; lending growth is expected to rebound in 2015 (7.4%), 2016 (8.9%) and 2017 (9.5%) as lower policy rates and reduced government financing needs push banks to increase their lending book; profitability should rise on further declines in NPLs and continued high capitalisation ratios.