|Jordanian economy begins to feel the fallout
|Almost three weeks have passed since the US attacks of 11 September. The Jordanian economy remains buoyant but cautious.|
Almost three weeks have passed since the US attacks of 11 September. The Jordanian economy remains buoyant but cautious.
Trade and industrial sectors in the Kingdom have all been affected by the attacks. Although Jordanian officials remain reluctant to speak about the direct impact of the US attacks on the local economy recent press reports indicate many economic sectors in Jordan will endure heavy losses over the next three months as 2001 closes out.
The ASE has lost 10 points in the first two weeks following the US attacks, now dropping below the psychological barrier of 150 points. Around JD 400 million were lost in transactions made on the ASE's banking and insurance sectors. The latest sessions on the ASE floor were rife with anxiety over potential albeit likely US military strikes against Afghanistan.
Jordanian economic observers were all suggesting the US attacks had no direct effects on the local markets as opposed to the global markets. News reports noted later though that 85 percent of the bookings made in Jordanian hotels were cancelled, as were all European and US tour groups' visits to the Kingdom.
Samer Al Majali, president and CEO of Royal Jordanian, previously confirmed the national carrier is likely to suffer heavy losses estimated in millions of dollars because of the turmoil and its effects on the global airline business. No relief is expected through the end of year. The Jordanian government approved a $2 billion plan to ensure the RJ flights to Europe and North America.
The Minister of Transportation said the plan comes in response to the setback in global insurance companies who decided to cut security programs on international flights. RJ officials indicate the plan was a necessarily swift move by the government to ensure all flights go out on schedule.
The government also passed a plan to cut taxes on hotel bookings and foreign tourist groups coming to the Kingdom. Prime Ministry sources indicate the government's plan is to revive the tourism sector currently suffering a 50 percent decline.
Even prior to the attacks the US economy was facing difficulties. Analysts now expect the White House to try and jump-start the teetering US economy. At the beginning of the week the New York Stock Exchange began to make back some of the lost territory that came after its largest point loss. US analysts fear future volatility due to the labor cutbacks being seen primarily in airline industries. They suggest any gains are a natural leveling off and cherry pickers trying to catch good deals.
In Jordan the US formidable future has begun to cast its shadow on the local economy. Economic observers in the Kingdom point out that developing countries like Jordan are sustaining economies linked to these political and economic developments, noting how US political and military retaliations against global terrorism have broader global economic implications.
"It should be clear a US strike on Afghanistan is only the beginning of a long mission which might affect countries in the region," said Mohammed Saqer, professor of economics at the University of Jordan. He told The Star the recent drop at the ASE was a reflection of the bad mood prevailing with local and foreign shareholders at the stock market. "The shareholders are afraid of the economic consequences that may come into view after the US strikes on Afghanistan."
Saqer believes the government should pursue a clear and transparent policy to reduce public expenditures and spread confidence and faith among investors and business people in the local economy. "Expenditures should go for developing the business environment making Jordanians feel an up in economic reforms."
Economic observers earlier pointed out the local economy needs to conform to the ups and downs that affect the global economy for the long-term. The observers urge the government to find a feasible new comprehensive mechanism to determine the government's future steps in terms of economic misfortunes.
This comes at a time when recent reports by the World Bank notes international investments coming to the Arab countries will reduce by 40 percent in coming months due to the US attacks.
The report stated many Arab countries would experience a severe recession in and an overall slump in the global economy.
"It is nonsense to compare the Jordanian economy with the US. The local economy needs to be renovated through swift and firm measures to hearten already timid sectors," said Saqer. He expressed little hope over the recent ratification of the Jordan-US Free Trade Agreement last week by the US Congress.
"I do not believe the Americans are much interested in promoting trade ties with Jordan for the time being. It will take time before Jordanians feel the real impact of this agreement on their economy," he concluded.