Economists, officials see Jordan's recovery from economic crisis in different ways

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AMMAN, Sept 26 (Xinhua): One year after the collapse of Lehman Brothers sparked a worldwide financial downturn, Jordan has only recently started to feel the fallout of the crisis, with officials and economists divided on whether the worst is yet to come.
With few major investments abroad and as a non-oil producing state, Jordan was not directly impacted when the crisis began in September 2008.
As a country that relies mainly on imports, Jordan initially benefited from the decrease in prices of oil and other commodities. However, recent figures indicate that the Kingdom was not immune to the crisis.
Jordan's state budget deficit soared during the first eight months of 2009 and currently stands at 763.2 million Jordan Dinar (about 1,076 million US dollars) taking foreign assistance into account, compared to 147.3 million JD during the same period in 2008, according to official figures.
Foreign aid was much lower during the January-August period standing at 102.7 million JD, an 87.8 per cent drop from the same period last year.
Exports and remittances from Jordanian expatriates have also witnessed a decline, adding to growing public debt which during the first eight months of 2009 stood at about 9.3 billion JD, increasing by 9.4 per cent compared to the same period last year.
Some officials from industrial and commercial chambers expressed optimism over Jordan's economic outlook, predicting a 2010 recovery in line with improving global markets, while economists say that as the crisis was slow to reach the Kingdom, so will be signs of improvement.
"Many sectors in Jordan have been impacted by the crisis and we are just now feeling the effects," Zaki Ayyubi, director general of the Jordan Chamber of Industry, told Xinhua.
Jordan's industrial sector, a major contributor to the country' s Gross Domestic Product (GDP), was hit hard by the drop in overall exports, Ayyubi said.
According to official figures, the Kingdom's overall exports and re-exports dropped by 15.6 per cent during the first seven months of 2009 to 2.6 billion JD, compared to 3.1 billion JD during the same period last year.
"Banks' conservative lending policies negatively affected dozens of small and medium- sized projects, with many having to close due to failure to obtain loans," said Ayyubi.
However, despite the fallout from the crisis, Ayyubi said he is optimistic of an imminent recovery.
"No major companies have collapsed, no factories have filed for bankruptcy. The overall global trend is improving and Jordan will be affected by the global trend," he said.
Hani Khalili, a board member of the Amman Chamber of Commerce, said a solution to the impact of the crisis lies in having banks facilitate lending.
"Jordan was affected by conservative lending policies adopted by banks in the country. No major collapse has happened in Jordan, it is just a business slow-down," Khalili said, adding that he expects a recovery in mid-2010.
According to official figures, credit facilities given by banks to individuals plunged by 4.9 per cent during the first seven months of 2009 compared to the same period in 2008.
"The solution is to start lending and the fact that no major collapse has taken place is ushering in a recovery," Khalili told Xinhua.
Zuhair Omari, president of the Housing Investors Society, said he is also optimistic of a rebound in 2010.
According to him, the sale of lands during the first half of 2009 dropped by more than 50 per cent to 30,403 transactions, compared with 65,385 in the same period of 2008.
However, he stressed that "the need for houses is on the rise and prices will be a little bit cheaper than in the past, so that is encouraging for more sales. Plus, the world's markets are improving."
Although some believe a recovery may be on the horizon, Jordanian economist Yusuf Mansour paints a less-than-rosy picture.
"The government's handling of the crisis was reactionary, not precautionary. It was very conservative and focused on borrowing from abroad, which is a problem," Mansour told Xinhua.
"There is no certainty of how it will look like in the future. If more conservative policies are to follow, the situation will worsen," he said.
Another economist Salameh Darwai agreed. He said the current recession will negatively affect the 2010 state budget, which would then in turn negatively impact allocations for development projects.
Warning of a "deteriorating situation," he stated in a column recently that "there is a need to revise the situation to curb the negative impact, or the situation will continue to deteriorate and head towards the unknown."