Jordan is classified by the World Bank as an “upper-middle income” country. However, approximately 14.4% of the population lives below the national poverty line on a longterm basis (as of 2010), while almost a third fall under the national poverty line during some time of the year—known as transient poverty. The economy, which boasts a GDP of $38.210 billion (as of 2015), grew at an average rate of 4.3% per annum between 2005 and 2010, and around 2.5% 2010 onwards. GDP per capita rose by 351% in the 1970s, declined 30% in the 1980s, and rose 36% in the 1990s. The Jordanian economy is one of the smallest economies in the region, and the country’s populace suffers from relatively high rates of unemployment and poverty.
Jordan’s economy is relatively well diversified. Trade and finance combined account for nearly one-third of GDP; transportation and communication, public utilities, and construction account for one-fifth, and mining and manufacturing constitute nearly another fifth. Despite plans to expand the private sector, the state remains the dominant force in Jordan’s economy. Net official development assistance to Jordan in 2009 totalled USD 761 million; according to the government, approximately two-thirds of this was allocated as grants, of which half was direct budget support.
The official currency is the Jordanian dinar, which is pegged to the IMF’s special drawing rights (SDRs), equivalent to an exchange rate of 1 US$ ≡ 0.709 dinar, or approximately 1 dinar ≡ 1.41044 dollars. In 2000, Jordan joined the World Trade Organization and signed the Jordan–United States Free Trade Agreement, thus becoming the first Arab country to establish a free trade agreement with the United States. Jordan also has free trade agreements with Turkey and Canada. Jordan enjoys advanced status with the EU, which has facilitated greater access to export to European markets. Due to slow domestic growth, high energy and food subsidies and a bloated public-sector workforce, Jordan usually runs annual budget deficits. These are partially offset by international aid.
The Great Recession and the turmoil caused by the Arab Spring have depressed Jordan’s GDP growth, impacting trade, industry, construction and tourism. Tourist arrivals have dropped sharply since 2011. Jordan’s finances have also been severely strained by 32 attacks on the natural gas pipeline in Sinai supplying Jordan from Egypt by Islamic State affiliates, causing it to substitute more expensive heavy-fuel oils to generate electricity. In November 2012, the government cut subsidies on fuel, increasing its price. The decision, which was later revoked, caused large scale protests to break out across the country.
Jordan’s total foreign debt in 2012 was $22 billion, representing 72% of its GDP. In 2016, the debt reached $35.1 billion representing 90.6% of its GDP. This substantial increase is attributed to effects of regional instability causing: decrease in tourist activity; decreased foreign investments; increased military expenditure; attacks on Egyptian pipeline; the collapse of trade with Iraq and Syria; expenses from hosting Syrian refugees and accumulated interests from loans. According to the World Bank, Syrian refugees have cost Jordan more than $2.5 billion a year, amounting to 6% of the GDP and 25% of the government’s annual revenue. Foreign aid covers only a small part of these costs, 63% of the total costs are covered by Jordan. An economic program was adopted by the government which aims to reduce Jordan’s debt-to-GDP ratio to 77 percent by 2021.
The proportion of skilled workers in Jordan is among the highest in the region in sectors such as ICT and industry, due to a relatively modern educational system. This has attracted large foreign investments to Jordan and has enabled the country to export its workforce to Persian Gulf countries. Flows of remittances to Jordan grew rapidly, particularly during the end of the 1970s and 1980s, and remains an important source of external funding. Remittances from Jordanian expatriates were $3.8 billion in 2015, a notable rise in the amount of transfers compared to 2014 where remittances reached over $3.66 billion listing Jordan as fourth largest recipient in the region.