Economists are known to make forecasts. And they do that a lot. Maybe because when one spews out so many predictions, he is bound to get a few right.
So, here are my forecasts for the coming year. No, I will not use a crystal ball, just some current trends, a bit of common sense and many hopeful prayers.
The longest and weirdest economic problems of 2008, the availability of credit, will increase significantly next year. Yes, one will be able to borrow, invest and purchase more in 2010 as the Central Bank continues to ease money supply. The recent decrease of the CBJ discount rate, ineffective as it is, will most likely be followed by other actions that will make banks lend again.
With the ease of the money supply, prices will start to rise again, and property prices will increase from the dismal levels of 2008. Another reason for the increase in prices and the return to positive inflation is that oil prices will rise, especially if the dollar continues to fall (the world seems to be conspiring against it, with the exception of Jordan, of course) and our imports will become, as a result, more expensive.
Yes, we will return to the inflationary era, but not to the levels of 2007, and inflation will be single digit, maybe around 5-6 per cent.
Unemployment will ease off from the almost 14 per cent rate we have suffered this year because people will start to be less gloomy about the economy and as they are able to spend more, employers will hire more.
Remittances will start to rise again. The Gulf will take more of our expatriated Jordanians. The slack generated by Dubai’s cooling growth rate will be picked up by the likes of Abu Dhabi, Qatar and Saudi Arabia. Saudi Arabia, the largest Gulf economy, will grow even larger in light of its continuously rising oil income, and its largest ever development budget. Consequently, it, and the rest of the Gulf (with the exception of Dubai) will hire more Jordanians.
Foreign direct investment, especially from Saudi Arabia, Kuwait and Iraq, will rise again and an era of increasing inflows will be ushered in. Jordanian assets are so undervalued right now that it makes sense for our Gulf brethren to come in and spend their excess cash picking up some top quality, under priced investments.
Tourism receipts, primarily generated by other Arab tourists, mainly from the Gulf, will be boosted as the Gulf wealth continues to rise. Yes, we may witness even a hike in tourism receipts as they stop by more often next year. For them, the worst is over and we should be able to make some cash in the process.
Some of our exports will also rise as the dinar becomes cheaper, which will significantly and positively impact our exports of potash and phosphate. However, this will be countered by the dwindling exports from the QIZs. Garment exports were down this year by almost 20 per cent and there is little chance they may ever rise again.
Our exports of pharmaceuticals will continue to fall as we continue to lose traditional Arab markets where local production has placed a halt on imports from Jordan. But no need to worry; our exports are a third of our imports anyway, so they don’t matter much.
Consequently, economic growth will rise beyond the 3 per cent of this year. It may even slightly surpass the 6 per cent mark.
But what of that popular concern, the budget? Ask the government, or Nostradamus.
JordanTimes, December 22, 2009