Expectations of stable economic recovery in Jordan in 2022 despite global adverse conditions | Money and business | zad jordan news

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The World Bank on Monday expected the Jordanian economy to grow by 2.1% in 2022, but the rise in commodity prices, supply chain bottlenecks and the impact of the war in Ukraine pose significant negative risks to the country’s economic prospects.

The bank said in a statement that this forecast depends on the relatively strong growth rate of 2.2% recorded in 2021 thanks to the supportive monetary and fiscal policies to which the government has resorted, in addition to the gradual reopening of economic activities. However, unemployment, especially among youth and women, remains at alarming levels, and reforms are needed to stimulate investment to create more and better jobs.

According to the Spring 2022 issue of the World Bank’s Jordan Economic Monitor Report entitled: “Global unrest limits recovery and job creation,” Jordan’s economic growth in 2021 was strong, thanks to a significant expansion in the service and industrial sectors, and a strong and unexpected recovery in the travel and tourism sector. However, some sub-sectors, especially the services sector which relies heavily on direct interaction with the public, such as restaurants and hotels, remain behind pre-pandemic levels.

According to the report, the Jordanian government has resumed the path to controlling public finances, supported by this strong growth in its tax and non-tax revenues. It has also enabled the government to significantly increase capital expenditure in 2021, a welcome development given the critical role of investment in reviving economic activity and raising employment rates.

Despite unfavorable changes in global commodity prices and a gradual rise in inflation, according to the World Bank, consumer prices have remained relatively low compared to other countries in the region.

However, according to the report, the recent economic recovery has not led to high job creation. Although the recovery in the services sector helped ease some of the pressure on the labor market, the total unemployment rate in Jordan at the end of 2021 reached about 23%, compared to the pre-pandemic level of 19% at the end of 2019.

The report concludes that the high levels of unemployment and employment in the informal sector in Jordan are mainly due to the limited ability of the private sector to create more and better jobs, as small, low-productivity firms dominate the economy. .

Saroj Kumar Jah, Regional Director of the Mashreq Division at the World Bank, commented: “Despite the economic recovery Jordan has seen, urgent social and economic challenges, including high unemployment rates, especially among youth and women, will continue to exist. accelerating the implementation of investment support reforms is critical to injecting dynamism into the economy and reviving the private sector as a key driver for job creation in the country.

The Jordan Economic Monitor makes four recommendations to encourage investment and improve the country’s ability to better manage times of uncertainty. These recommendations are: strengthening microeconomic reforms to encourage private sector development, implementing reforms aimed at addressing unemployment, especially among youth and women, and shifting to a post-crisis macroeconomic policy framework to ensure that investors are given adequate and reassuring signals about the investment climate and prices, in addition to the renewal of Jordan’s debt financing strategy to sustain public investment in infrastructure and human capital development in the country.

The report devotes a special chapter entitled “Creating More and Better Jobs in Jordan” in which it reviews the key structural challenges in the Jordanian labor market as well as the necessary reforms needed to overcome them. The report shows that the Corona pandemic has reduced jobs for young people, who make up about one-fifth of the total working age population in Jordan. By the end of 2021, official statistics indicated that more than half of the country’s youth were unemployed, with a larger percentage among young female workers. The striking gender gap still characterizes the Jordanian labor market, with female labor force participation rates 40 percentage points lower than men, making it one of the lowest in the world.

“Several factors contribute to the high unemployment rate for women, including unfavorable working conditions for the family, limited financial inclusion for women and a lack of access to reliable public transport,” said Saadia Rafqat, Senior Economist at the World Bank and author of the report. . and security, as well as prevailing social norms. More economic opportunities for women can be created by lifting these restrictions, such as removing legal restrictions on access to jobs, expanding access to quality childcare and increasing women’s financial inclusion. “

The report provides a summary of recommendations to remove obstacles to the dynamics of the private sector in Jordan and create more and better jobs through reforms that increase competition in markets, reduce barriers to entry and the level of infrastructure that businesses support, increase.

These policies should be accompanied by additional efforts to improve the skills of the workforce, address the mismatch of those skills with the requirements of the labor market and give preference to the requirements of the twenty-first century in terms of advanced skills and competencies.

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