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Despite the revision, the contribution will be similar to the pre-pandemic five-year average.

This has prompted us to cut private consumption’s contribution to headline growth in 2022 from 2.3pp to 1.9pp. Indeed, while higher oil income in GCC countries will boost remittance inflows to Jordan, rising inflation, which we forecast at 2.9% in 2022 (up from 2.5% previously), will more than offset their positive impact on private consumption. However, we expect higher international food and energy prices as a result of the Russia-Ukraine war will weigh on household consumption growth. We expect that restrictions will continue to loosen as more of the population become vaccinated (43.7% of the population are fully vaccinated at the time of writing), thus supporting private consumption. Nevertheless, our current forecast is slightly above the pre-pandemic ten-year average of 2.6%.Īdditionally, in March 2022 (most recent data), visits to grocery stores, pharmacies and other retail centres have resumed their upward trajectory after the peaking of the Omicron outbreak in the country ( see chart above, right). This has prompted us to reduce our 2022 forecast for Jordan’s growth by 0.3 percentage points (pp).

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While we expect that household consumption will represent the most significant driver of real GDP growth in 2022, increased oil and wheat prices stemming from the Russia-Ukraine war will temper down growth in this component. In 2021, real GDP growth came in at 2.2%, in line with our estimate, with economic growth in Q421 driven by strong activity in the construction, quarrying, transport and retail sectors. An intensification of the Russia-Ukraine war could further increase commodity prices, exacerbating inflationary pressures and weighing on household spending on Jordan.Īt Fitch Solutions, we anticipate that Jordan’s real GDP growth will accelerate from 2.2% in 2021 to 2.7% in 2022.

The outbreak of new Covid-19 variants could delay the recovery in the tourism sector with negative effect on employment and services exports.

Risks to the outlook are to the downside. While we continue to expect that real GDP growth will mainly be driven by household consumption, we now anticipate that growth in this component will be tempered by higher global commodity prices, especially food. This marks a downward revision from our 3.0% growth forecast prior to Russia’s invasion of Ukraine. At Fitch Solutions, we expect that Jordan’s real GDP growth rate will accelerate from 2.2% in 2021 to 2.7% in 2022.