Estimated impact of COVID-19 on the Jordanian economy

Abstract

This study aims to estimate the negative effects of COVID-19 on the Jordanian economy. These effects are expected to coincide with the results of studies carried out by international institutions. For example, the International Labor Organization (ILO) estimated indicate an increase in the number of unemployed to 5.3 million (the “low” scenario) and 24.7 million (the “high” scenario), from a baseline of 188 million in 2019 (ILO, 2020a). Experts from the World Bank and the International Monetary Fund (IMF) confirmed that the global economic downturn (caused by the coronavirus pandemic) is the largest in the past eight decades, which will lead to an increase in poverty and inequality and harm economic growth in the long term. (News 18, 2020). To measure the impact of COVID-19 on the Jordanian economy, the following indicators were adopted: an economic growth, an unemployment rate, a foreign trade (imports and exports), public revenues, public spending, a public debt, and a budget deficit. The study relied on data contained in reports issued by international institutions and official institutions in Jordan. The results indicate a slowdown in the rate of economic growth, an increase in the unemployment rate, a decrease in exports and imports, an increase in the public debt and the budget deficit

Short-and Long-run Influence of COVID-19 on Jordan's Economy

“…When compared to the drivers of growth in the fourth quarter of last year, all economic sectors grew at substantially slower rates in the first quarter of 2020.The mining and construction industries were the hardest hit by the crisis. It was -1.0% and 1.5%, respectively (Aljaloudi, 2021). In actuality, the GDP for 2020 was US$43.6 billion (The Word Bank, 2023e), falling by US$0.9 billion from the 2019 GDP or a 2.1% decline (Figure 5).…”

“…This decline is attributable to a decrease in both tax and non-tax revenues. Jordan was able to compensate for the drop in domestic public revenues by raising the value of international grants and loans received throughout the crisis (Aljaloudi, 2021). The pandemic led to reduced consumption and a decline in purchasing power, resulting in a drop in tax revenue from sales tax.…”

“…The reduction in public spending is modest due to the government's resolve to secure enough financial amounts for the Ministries of Health and Social Development, as well as to assist businesses in mitigating the economic repercussions of the COVID-19 problem (Aljaloudi, 2021). the Government is promoting e-wallets, to ensure wage payments as well as health safety since wages will not be paid in cash/paper bills.…”

“…To aid families affected by the pandemic, the European Union has provided 200 million euros in additional aid to Jordan to help tackle the COVID-19 crisis and mitigate the social and economic impact of the epidemic. Japan also provided financial support of 2.2 million dollars to support the work of the United Nations Children's Fund (UNICEF) in Jordan in order to preserve the health, education, and protection of children in light of the spread of COVID-19 (Aljaloudi, 2021). An evaluation conducted by the UNDP in 2020 took place during the lockdown period from late April to early May in Jordan (UNDP, 2020).…”