AMMAN: Jordan’s economy picked up in the second quarter of 2010, growing 2.9 percent from a year earlier as transport and financial services sectors rebounded, data showed on Sunday.
This compares with a 2.03 percent rise in Q1 y/y. The economy expanded 2.8 percent in 2009 as a whole, slowing from 7.8 percent growth in 2008 and was its worst performance since an economic crisis in 1989 when the country was forced to seek help from the International Monetary Fund.
Economists said it was too early to predict whether the aid-dependent kingdom was on the path of recovery and that it would take some time to get back to previous growth levels.
"There won’t be any further contraction in the economy but it’s too premature to say we are out of the recession. It won’t be clear before another two quarters," said Jawad al-Anani, a prominent economist and former minister.
Official figures showed growth in the second quarter was fuelled by transport, storage, communications and financial sectors.
Construction, a key driver of the economy, fell 12 percent in the second quarter from the first as the kingdom’s property market continues to reel from oversupply combined with a liquidity crunch that has left developers struggling as risk adverse banks curb credit lines.
The International Monetary Fund (IMF) downgraded Jordan’s economic growth to 3.5 percent this year after an assessment of lower capital inflows and private investment.
Analysts say uncertainties remain due to a continuing decline in direct foreign investment and foreign aid and weak domestic demand.
But the IMF and Jordanian officials predict the economy will start recovering beyond 4 percent in 2011 as the impact of the global downturn on the kingdom eases.
That will still be below average annual growth of 6-7 percent in recent years.
While Jordan’s economy has weathered the global economic downturn better than most Western economies, domestic demand and remittances from abroad have been hit.
The energy importer has close business and economic ties to Gulf Arab governments which were hard hit by a drop in oil prices last year, their main source of state revenue.
Jordan’s budget deficit doubled to $2 billion last year. It has announced budget cuts of $1.4 billion this year, aiming to slash the deficit to 6.3 percent of GDP.
GDP rose to 9.61 billion dinars ($13.5 billion) in 2009 against 9.35 billion dinars in 2008.
