Jordan Economic Outlook
After accelerating unexpectedly in the first quarter, annual GDP growth in the second quarter was likely moderate. Looking at available data, industrial production declined nearly 5% year on year in Q2, the steepest fall since Q4 2020, while the unemployment rate rose from Q1. Moreover, the Central Bank mirrored the Fed in May and raised interest rates further to a multi-year high, likely restraining investment and credit. On the flipside, average inflation in Q2 was the softest in over a year, which likely lifted some pressure off purchasing power and supported spending in turn. Moreover, foreign investment jumped nearly 50% annually in January–June. Lastly, the key tourism industry continued to recover: In the first seven months of 2023, tourist arrivals jumped by over 50% year on year, and tourism revenue growth jumped accordingly.
Inflation receded to a 28-month low of 0.9% in July (June: 1.2%) on softer price increases for housing and utilities and a steeper fall in prices for transport. In the remainder of H2, inflation should pick up slightly from current levels, although overall in 2023 it will be lower than in 2022 due to higher interest rates and a loose labor market.