• Global : Jordanian economy grew at double digit rates for the fourth year in a row
• Global : Jordanian GDP to sustain the same growth pattern for 2008
Global Investment House – Kuwait –Jordan Economic & Strategic Report-Jordan's nominal GDP grew at a CAGR of 10.6% during the period 2002-07. In real terms, GDP grew at CAGR of 6.4% during the same period. On Y-o-Y basis, nominal GDP continued to grow at double digits for the fourth year in a row. Preliminary figures pointed out that nominal GDP stood at around JD11.2bn in 2007, growing by 12.3% as compared to a growth rate of 11.8% in 2006. In real terms, GDP grew by 6.0% in 2007 which was a slight decline from 6.3% of growth reported for 2006. Going forward, we expect GDP to maintain the same growth pattern of 2007 to report 6.1% of real growth by the end of 2008.
Gross Domestic Product (GDP)
2002 2003 2004 2005 2006 2007
Nominal GDP (JD mn) 6,794.0 7,228.7 8,090.7 8,941.5 9,997.4 11,225.3
Nominal GDP (US$ mn)* 9,593.1 10,206.9 11,424.1 12,625.4 14,116.3 15,850.1
Nominal GDP growth rate 6.8% 6.4% 11.9% 10.5% 11.8% 12.3%
Real GDP (JD mn) 6,034.1 6,286.3 6,824.4 7,307.2 7,768.1 8,230.7
Real GDP (US$ mn)* 8,520.1 8,876.3 9,636.1 10,317.8 10,968.6 11,621.7
Real GDP growth rate 5.8% 4.2% 8.6% 7.1% 6.3% 6.0%
Per capita GDP (JD) 1,332.7 1,382.2 1,512.3 1,633.7 1,785.3 1,961.4
Per capita GDP (US$)* 1,881.7 1,951.6 2,135.3 2,306.9 2,520.8 2,769.5
Per capita GDP growth rate 4.2% 3.7% 9.4% 8.0% 9.3% 9.9%
* 1JD = 1.412 US$
Source: Central Bank of Jordan
Supported by the high GDP growth rates that surpassed population growth rates, Per Capita GDP has improved significantly from JD1,785 (US$2,520) in 2006 to JD1,961 (US$2,769) in 2007, an increase of 9.9%. Generally, Jordan's population grew at a CAGR of 2.3% during the period 2002-07, while GDP per capita grew at a CAGR of 8.0% during the same period.
In real terms, most economic sectors registered positive growth rates; the sectors of "social and personal services", “construction” and "finance and insurance" registered the highest growth rates amounting to 9.7%, 8.0% and 7.9%, respectively by the end of 2007. Meanwhile, some sectors witnessed a contraction in their value added, namely, agriculture and "mining and quarrying" which contracted by 3.3% and 1.4%, respectively.
GDP Growth (2002-2007)
Source: Central Bank of Jordan
Looking at the relative importance of each sector in GDP during the period 2002-07, it is evident there are mainly five sectors which played a major role in Jordan's economy namely the financial services & real estate sector, manufacturing, government services, transport & communication, and tourism sectors. However, different trends have been witnessed across these sectors.
Sectors' contribution to GDP
In JD mn 2002 2003 2004 2005 2006 2007
Agriculture 2.5% 2.7% 2.7% 3.0% 3.0% 3.1%
Mining and Quarrying 3.1% 3.0% 3.1% 3.4% 3.1% 3.1%
Manufacturing 16.3% 16.6% 17.7% 17.5% 18.4% 18.6%
Electricity and Water 2.6% 2.5% 2.6% 2.3% 2.2% 2.0%
Construction 4.2% 4.1% 4.4% 4.6% 4.7% 4.7%
Trade, Restaurants and Hotels 10.5% 10.0% 10.1% 10.1% 10.0% 10.0%
Transport and Communications 15.5% 15.6% 16.0% 15.2% 14.6% 14.8%
Finance, Insurance, Real Estate, and Business Services 20.4% 20.2% 19.5% 21.1% 21.7% 21.6%
Social and Personal Services 4.8% 4.8% 4.7% 4.6% 4.6% 4.7%
Producers of Government Services 18.9% 19.3% 18.1% 17.2% 16.7% 16.4%
Producers of Private Non-Profit services for households 1.0% 1.0% 1.0% 0.9% 0.8% 0.8%
Domestic Household Services 0.2% 0.2% 0.2% 0.2% 0.2% 0.2%
Total GDP* 100% 100% 100% 100% 100% 100%
Excluding Imputed Bank Service Charges and Net Taxes
Source: Central Bank of Jordan
Finance, insurance, real estate & business services sector was the highest contributor to GDP at 21.7% in 2006 and it continued to top the list at 21.6% in 2007 as well. Manufacturing had the second highest share of GDP in 2007, however, it is important to note hat it exhibited an increasing share in GDP from 16.3% in 2002 to 18.6% in 2007. Finally, ranking the third in its contribution to GDP, government services witnessed a declining contribution over years from 18.9% in 2002 to 16.4% by the end of 2007.
As for GDP by type of expenditure, analyzing the latest available data for the year 2004 revealed the fact that Jordanian economy was primarily a consumption led economy up to the end of 2004. Through the period 2001-04, final consumption –both private and public- continued to account for more than 100% of the GDP. By the end of 2004, combinedly both private and public consumptions accounted for 103.0% of GDP. Accounting for the largest share in GDP, private consumption stood at 81.7% of GDP, while public consumption accounted for 21.3% of GDP. As for Gross Fixed Capital Formation (GFCF), its contribution has been increasing over the period to account for 24.8% of GDP by the end of 2004 up from 19.4% reported by during 2001. Finally and most importantly was the huge negative contribution of net exports, it increased from 25.1% in 2001 to reach 30.4% by the end of 2004. This was mainly due to imports continuing to surpass exports over years to account for 71.2% and 47.2% respectively on average.
