• Global : Jordanian general industrial production index grew by 3.2% in 2007
Global Investment House – Kuwait –Jordan Economic and strategic Outlook - Industrial Sector-The industrial sector in Jordan is divided into two segments; the manufacturing sector and the mining & quarrying sector. Private investors are mainly engaged in light industrial activities such as food processing, textiles, and consumer goods, while major heavy industries such as cement, oil refineries, and fertilizers were originally the result of government initiatives.
The industrial production index has been exhibiting an increasingly upward trend after the trough of 2003. This reversal is mainly attributed to the resumption of exports to Iraq following the war in 2003. Looking at the relative weight of different industries in the index, manufacturing was the heavyweight constituting more than 80% of the index. The General Industrial Production Index rose 3.2% in 2007, on top of a 5.8% increase reported during 2006. The increase came owing to a 2.3% increase in production output of the manufacturing sector as well as 18.1% increase in electricity and gas production index. Moving forward, industrial index reported a slight decline by the end of February 2008 where the general index declined by 3.5% on a YTD basis. However, on a Y-o-Y basis, industrial production general index reported 11.8% of growth over February 2007.
Movement of Industrial Indices in Jordan
Source: Central Bank of Jordan
The main industries in Jordan are the petroleum products, cement, clinker, pharmaceuticals, fertilizers, potash, and phosphate. During the period 2001-07, cement production recorded the highest CAGR among Jordan's major industries, growing at a CAGR of 3.8%, reflecting the Kingdom's growing construction and real estate sector. However, by the end of 2007 cement production stagnated at 4.0mn tons, the same level as 2006.
Quantities Produced by Major Industries
(Thousand ton) Manufacturing Mining & Quarrying
Petroleum Products Cement Clinker Chemical Acids Fertilizers Potash Phosphate
2001 3,596.8 3,173.3 2,896.4 1,407.5 670.5 1,962.6 5,878.1
2002 3,627.2 3,557.5 3,222.1 1,649.1 695.3 1,956.2 7,107.2
2003 3,694.6 3,514.9 3,170.1 1,499.3 634.0 1,961.1 6,762.3
2004 3,946.5 3,907.6 3,401.3 1,650.6 779.1 1,929.0 6,222.9
2005* 4,213.7 4,045.9 3,374.7 1,613.6 790.3 1,829.1 6,374.7
2006* 4,017.2 3,967.4 3,419.2 1,668.6 861.8 1,699.4 5,870.8
2007* 3,740.4 3,969.3 3,367.2 1,502.0 831.0 1,794.4 5,541.4
CAGR 01-07 0.7% 3.8% 2.5% 1.1% 3.6% -1.5% -1.0%
1Q07 943.6 788.4 718.5 400.8 221.2 465.9 1,430.3
1Q08* 1,046.9 946.5 894.4 264.1 143.6 464.5 1,164.8
Change Q-o-Q 10.9% 20.1% 24.5% -34.1% -35.1% -0.3% -18.6%
*Preliminary
Source: Central Bank of Jordan
On Y-o-Y basis however, Potash manufacturing witnessed the highest increase during 2007 to rebound from last year’s trough, reporting 5.6% of growth. Rest of the segments registered negative growth in 2007. Chemical acids and petroleum production were the worst hit in 2007 losing 10 % and 6.9% respectively.
Exports of Manufactured Goods
JD '000 2002 2003 2004 2005 2006* 2007*
Vegetables 95,296. 99,480 127,691 158,658 162,142 272,988
Phosphates 96,446 90,810 117,731 119,341 112,894 138,291
Potash 136,744 144,832 163,505 196,138 181,242 227,551
Pharmaceuticals 142,791 130,971 158,452 198,624 210,785 300,131
Fertilizers 63,952 73,661 123,760 122,521 151,468 219,229
Machinery & Transport Equipment 101,175 77,083 103,018 127,147 157,035 171,101
Clothes 357,697 479,087 960 745,348 882,235 843,498
Total 1,556,748 1,675,075 2,306,626 2,570,222 2,929,310 3,179,578
*Preliminary
Source: Central Bank of Jordan
As for industrial exports, it is worth noting that the textiles industry in Jordan has been gaining momentum on the back of the Qualified Industrial Zones Agreement (QIZ) by which textile products have gained duty-free and quota free access to the US markets. Thus, clothes continued to account for the largest share of exports over years. However, by the end of 2007, clothes exports declined marginally by 4.4% reaching JD843.5mn. As a result clothes share in total exports declined from 30.1% by the end of 2006 to 26.5% in 2007. Following the clothing industry, pharmaceuticals formed 9.4% of total exports, followed by vegetables at 8.6%, potash at 7.2% and Machinery and Transport Equipment at 5.4% of the total exports during 2007.
On a CAGR basis, exports of fertilizers witnessed the highest growth rate of 27.9% during the period 2002-07, followed by vegetables exports which grew by 23.4%. As a result, their shares have gone up during the same period, increasing from 4.1% and 6.1% during 2002 to 6.9% and 8.6% respectively by the end of 2007.
Finally, the government has been a great supporter of the industrial sector, providing numerous incentives such as the establishment of industrial estates, free-trade zones and granting tax breaks to industries outside the Amman-Zarqa corridor, where most industries are located.
