Jordan’s exports decreased in the first five months of 2012 while imports increased significantly. In other words, the trade deficit is growing fast, and something needs to be done about it, and done now.
The value of total exports reached JD2.29 billion (not counting re-exports) during the first five months of 2012, which signals a decrease of 2.2 per cent compared with the same period of 2011.
Meanwhile, imports reached JD6.34 billion during the same period of 2012; thus, imports rose by 15 per cent relative to the same period of 2011. The trade deficit (exports minus imports) for the first five months of 2012 was JD4.05 billion, an increase of 27.7 per cent over its level last year.
Does the fact that our exports are a third of our imports not cause alarm to anyone? Maybe it should, especially if we are to turn our attention to the type of goods we actually export and import.
Exports of crude phosphate, clothes (basically from QIZs) and pharmaceutical products (thanks to the Arab Spring) grew during the period. But this was not enough to counter the decrease in exports of potash, fertilisers and vegetables.
Our imports increased mainly because of the energy bill (crude oil) and cereals (which means bread, the food of most). On the other hand, imports of vehicles and machinery dropped by a double digit percentage.
The figures and types of exports and imports are important. The rise in imports occurred not because of a recovery of or increased in economic activity, since our imports of machinery and vehicles decreased.
Our exports, with the exception of clothes and pharmaceuticals, are totally dependent on potash and phosphate.
Decision makers should worry, as energy and food are two extremely important commodities.
What became of the initiative to make Jordan a knowledge economy? In other words, where are our knowledge intensive exports? The figures do not show them.
And what became of the initiative to improve the country’s competitiveness?
Measured by the decrease in exports and their type, it did not happen.
Then, what became of the foreign direct investment that poured into Jordan during 2004-2008? Had there been FDI in the manufacturing sector, we would have seen an increase in manufacturing by now (it takes 4-5 years for a factory to reach break-even point).
Should not these figures pique the curiosity of economic decision makers and donors? Why not review or even try to discuss, in light of these figures, the austerity budget, ill directed spending (and I do not mean the paltry subsidies here), and the mismanagement of national resources?
A foreign diplomat once told me: “Jordan does not have an economic policy, but has great PR.”
I think she was right! JordanTimes 28/8/2012
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