Etudes par pays volume 2, PDF, 346 p., 1,4 Mo - Femise

11873_2002 Study D2: Poverty, Informal Sector, Health and Labour
5. TRENDS AND CORRELATIONS
5.1. The evolution from the structural adjustment of the
1980s
Economic Developments
During the 1970s and early 1980s, Jordan enjoyed relatively high growth
rates in real GDP; as well as an expansion in the basic infrastructure and
welfare services. These achievements were assisted by external assistance,
mainly from oil-exporting Arab countries as a result of the increase of oil
prices, workers’ remittances, and the expansion of the Jordanian agricultural
and manufacturing exports to these markets. However, despite these
achievements, Jordan could not overcome the basic imbalances in its
economic structure, namely budget and balance of trade deficits. The
increase in GNP led to increase in total consumption to levels higher than
GDP levels, resulting in negative domestic savings and large imports.
Accordingly, dependency on external resources increased to bridge the
consumption gab and to finance the gross domestic capital formation. As a
result of the decline in oil prices in 1983, the region was hit with recession.
The economy of Jordan was affected negatively by the reduced demand for
its exports to these markets, lowering the demand for Jordanian workers,
and reducing regional assistance to Jordan due to the decline in revenues.
These factors produced a decline in real GDP growth rates from about 11
percent in the 1973-1980 period, to about 2.5 percent during 1983-1987, and
as a result per capita income decreased and unemployment increased to
about 9 percent in 1988. As the situation continued to deteriorate, and grants
and workers’ remittances continued to decline. In addition to the withdrawal
of foreign exchange reserves at the Central Bank, the government covered
its deficits (trade and budget deficits) by internal and external borrowing,
where total external debt constituted about 173 percent of the GDP, and 303
percent of the exports of goods and services in 1988. As a result, the foreign
reserves at the Central Bank declined considerably and the Jordanian Dinar
devalued by about 50 percent. In consequence, the cost of living increased
FONDAZIONE CENSIS
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