Officially known as the Hashemite Kingdom of Jordan, Jordan is an Arab country located in Western Asia on the Jordan River’s East Bank. The small country has an area of about 34,495 square miles and an equally small economy. In fact, the economy of the country is among the smallest in the region due to several reasons such as few natural resources. However, the country is still highly attractive to investors for a number of reasons such as skilled labor. Following the ascension of King Abdullah II back in 1999, the economy of Jordan had been improving steadily at a rate of 8% every year until 2008 when the Arab Spring caused a disruption. As of 2015, Jordan had the 89th biggest economy in the world with a gross domestic product (GDP) of around $37.6 billion while 2017 estimates place it at about $40.49 billion. A number of sectors including the services sector (such as financial services), the mining sector, the tourism sector, and other sectors drive the economy.
This sector accounted for around 70% of the country’s GDP back in 2004. In 2002, the sector was also able to employ a whopping 75% of the nation’s labor force. For these reasons, the sector is among the most advanced in the region and in the world. In 2007, the 15 listed banks raised profits that marked an increase of about 14.89% at about $909 million. In the same year during the period of the aforementioned strong economic growth, the net credit also increased by around 20.57% to a whopping $25.4 billion.
However, the 2006 Amman Stock Market correction had previously affected banks in a negative way, which forced banks to shift focus on major banking services in 2007. Consequently, the amount of commission income increased to $1.87 billion in 2007 while the net interest grew by around 16.65%. One thing to note about the country’s banking sector is that it is small despite its attraction to investors from the region and the world. The reason for this attraction can be attributed to several things including political stability, favorable regulations introduced by the Central Bank of Jordan, and other reasons. These investments and policies are among the reasons why Jordan was among the few countries to realize profits in 2009. The saturated insurance market has 29 companies servicing a small population of around 5.7 million people. However, 2006 saw the sector contribute about 2.52% to the GDP, which was an increase from the 2.43% contribution in 2005.
Generally, 2007 was a good year for the services sector considering that trade, industry, and construction also realized some major growth. In that year, the construction sector contributed about 4.25% ($678.05 million) of the country GDP. Some of the major projects by the construction sector include the Great Amman Municipality’s plan of expanding the nation’s capital to at least twice its current size by 2025. Other projects include the construction of a new airport terminal, a light raid to connect Zarqa and the capital, and the construction of the Amman ring road. In addition, residential structures are being erected in Zarqa while a series of luxury hotels are also under construction.
In 2007, the construction and real estate sector continued its steady growth. According to the Jordan Land and Survey Department, the sector’s trading in 2007 was about $8 billion, which was an increase from the previous year’s $7.4 billion. In past years, such as 2004 and 2005, the growths were much higher at around 75% and 48% respectively. Despite the decrease in growth, the future of the construction sector looks assured for now.
Industry And Manufacturing
The industrial sector includes a number of subsectors such as mining and manufacturing. In 2002, the whole sector accounted for about 26% of the country’s GDP. In 2002, a significant chunk of the labor force (at least 21%) was employed in this sector. The major industrial products include fertilizers, pharmaceuticals, cement, potash, phosphates, and clothes. The manufacturing subsector contributed a significant 20% of Jordan’s GDP largely due to the United States–Jordan Free Trade Agreement. The agreement led to the establishment of more than ten Qualifying Industrial Zones in Jordan, which produce light industrial products that generated about $1.1 billion revenue in 2004. The agreement with the US means that the US is one of Jordan’s main market. Aside from the US agreement, Jordan also has similar agreements with countries in the Middle East and North Africa.
As of 2008, the value of exports from things like potash and phosphates, which are mostly used for producing fertilizer, was around $1 billion. Other major sectors include pharmaceuticals, which generated about $260 million in 2008, and the textile industry, which generated revenue of about $1.19 billion. Despite the strength of the industry and manufacturing sector as a whole, the country does not have any natural resources of its own to sustain production. For this reason, the sector is a bit volatile since international prices of commodities may affect it negatively.
Information technology (IT) generates about $1.18 billion every year, which is about 13.5% of the country’s GDP. In the region, compared to other nations, Jordan’s IT industry is the most advanced. Currently, mobile penetration stands at around 80% with the major competitors battling it out for more customers. The three main competitors are Zain (39% of the market), Orange (36%), and Umniah (25%). Currently, the whole sector contributes about 14% of Jordan’s FDP while the employment opportunities keep increasing. Plans are underway to grow the sector to generate revenue of at least $3 billion. One of the reasons why this sector is so developed is the 1991 Gulf War, which brought many refugees from countries like Kuwait who helped in its development.
Tourism has a lot of potential but it does not function at its top level despite all efforts to improve the situation. Tourism should be high since the country has a rich history as evidenced by plenty of ruins from historic times. Despite these challenges, the sector was able to generate about $1.4 billion revenue in 2015. In addition, the sector employs about 30,000 people with the figures expected to rise.