Jordan Times
Friday, July 23, 2004
Analysts see too much
optimism in economic forecasts, progress
By Mahmoud Al Abed
AMMAN — Economists and analysts differed in their assessment of recent
government statements forecasting a high growth in gross domestic product (GDP)
for the coming three years.
A Ministry of Planning and International Cooperation report on Tuesday envisaged
a 5.5 per cent growth in GDP for this year compared to 3.2 per cent in 2003.
Jordanian officials have also spoken of a six per cent average growth in GDP in
2006, expecting that the full implementation of Socio-Economic Transformation
plan would allow Jordan to sustain this average.
Speaking to representatives of donor countries this week, Planning and
International Cooperation Minister Bassem Awadallah predicted per capita income
to rise 3.6 per cent by 2006.
However, economic analysts and critics agreed that there is too much optimism of
either the achievements or the expectations.
“I agree that the economic growth would be over four per cent this year, but the
exact achievement and real figures will be calculated by the Department of
Statistics after the year-ends,” said Tayseer Abdul Jaber, an economist and a
former minister.
He attributed the growth seen this year to “activity in the construction and the
exports sectors, in addition to the wealth effect, especially in the rise in the
value of real estate and shares in Jordan's capital market.”
But for the coming years, he only “hopes” that growth in the coming few years
would exceed five per cent.
Analyst Fahd Fanek was not against setting six per cent as a target of GDP
growth in the coming years. He said achieving such a target is “not impossible”
but he expected that real achievement would be lower than that.
However, he played down the significance of the 6.9 per cent figure announced as
the GDP growth in the first quarter of this year. He said that growth is
compared in this case with the same period last year when the economy received a
hard blow during the countdown to the Iraqi war.
The GDP, the broadest measure of the health of a state's economy, can be defined
as the total market value of goods and services produced within a given period
after deducting the cost of goods utilised in the process of production.
Commenting on the government-released figures, veteran MP and public
administration academician, Abdullah Akaileh, said that the growth rates
announced are not real, simply because they have not reflected on the living
conditions of the people.
He said that the growth was concentrated mainly in exports from Qualified
Industrial Zones (QIZs) and the telecom sector “which do not reflect directly on
the living conditions of people.”
Akaileh described the added value in the QIZs, for example, as “peanuts” and
indicated that the jobs created there for Jordanians pay only the minimum.
Awadallah and Finance Minister Mohammad Abu Hammour have acknowledged recently
that people would soon start reaping the fruit of progress, but Fanek described
this as “mere political talk.”
“Yes, we will have a bigger pie, but not necessarily every individual will feel
that,” he remarked.
The issue of distribution of wealth was also received with various comments by
the experts interviewed by The Jordan Times.
While Akaileh, a leading opposition figure, stressed that there is a high degree
of inequality with regard to this aspect, Abdul Jaber said there is no real
problem in this context.
Abdul Jaber urged people to increase their productivity and upgrade their skills
so that they can win a bigger slice of the “pie.”
For Fanek, the theory of “eroding middle-class,” is “street talk that has been
there for decades.”
“Inequality in wealth distribution is not worse than before,” he emphasised,
insisting that “no less than 70 per cent of Jordanians belong to the
middle-class.”
According to Fanek, 25 per cent of the population are poor while only five per
cent constitute the higher class.”