Jordan Economic Outlook
Annual GDP growth waned to 2.0% in the final quarter of 2022 (Q3: +2.5% yoy), the softest expansion since Q1 2021. The agriculture, hunting, forestry and fishing sector made the largest contributions to growth, increasing nearly 5% year on year. Despite the moderation, the economy grew 2.5% overall in 2022, above the 2.2% post-pandemic rebound tallied in the year prior. The mild improvement in the unemployment rate in 2022 should have provided some support against intense price pressures during the year. In 2023, the economy should have strengthened in Q1, although challenges remain. Industrial output growth accelerated in January–February from Q4 2022’s average. Meanwhile, inflation remained elevated, and borrowing costs were increased further through March, boding ill for spending and investment.
In March, inflation cooled to 3.9% (February: 4.2%), with fuel and lighting remaining key drivers of inflation. Meanwhile, effective from 5 May, the Central Bank hiked the re-discount rate by 25 basis points to 8.25%, moving in lockstep with the Fed. Price pressures should continue to soften in 2023 amid restrictive monetary policy.