After a few tough years, Jordan's exports are bouncing back, with new potential on the horizon.
Lying on the east bank of the Jordan River, the Hashemite Kingdom of Jordan is a unique country in the Middle East. With little or no crude oil resources to tap, its economy has developed in an organic manner right from the onset. Admittedly, the Kingdom still needs to contend with economic maladies such as unemployment and poverty. However, all things considered, Jordan’s economy has undergone a process of growth and liberalization during the reign of King Abdullah II.
According the World Factbook, the revenue generated by the export of goods and services account for roughly one-third of Jordan’s GDP, which means exports are of critical importance for the country’s economy. In 2017, Jordan exported some USD7.5 billion worth of goods, according to the World Bank. This figure may not be impressive at first glance, but one must bear in mind that circumstances such as water scarcity and barrenness of the land limit the country’s output in many areas such as agriculture and heavy water-intensive industries.
Jordan is trying to make up for its limited natural resources, in part, by fostering good diplomatic relations. Jordan has one of the highest numbers of FTAs in the world; the Kingdom currently benefits from FTAs with the US and Canada, the EU, many countries in the MENA and GCC regions, among many others. Forming roughly 20% of the country’s exports by value, textiles, clothing, and accessories are the leading outputs of Jordan, fetching USD1-1.5 billion per year for the Kingdom. Pharmaceuticals (9%), fertilizers (8.5%), and minerals such as salt, potassium, and phosphates along with cement (6%) were other major exports of Jordan in 2017. Meanwhile, the export of inorganic chemicals—currently generating around USD385 million per year—has been on the rise in recent years, outpacing the growth in the export of all other commodities.
In 2015, when the Middle East was experiencing some of the darkest days of its history, Jordan lost the markets of Iraq and Syria. As a compensatory measure, the nation’s exporters demanded the authorities facilitate their access to African markets. According to the Jordan Chamber of Industry (JCI), around 2.5% of Jordan’s exports headed for Africa at the time, but this figure jumped to over 5% in 2018. The good news, however, is that markets of Syria and Iraq have become accessible once more as peace is slowly returning to the region.
The reopening of Jordan-Syria border in 2018 came as a relief to the exporters of fruits and vegetables, which are mostly based in the Jordan Valley, as the border closure had put the sector in a tight spot, with prices taking a nosedive. The reopening of the border has revived other sectors too; many Syrian detergent companies used to import their raw materials from Jordan before the civil war, and Jordanian exporters are hopeful that the demand for minerals and inorganic chemicals will grow in 2019 and 2020.
The Iraq-Jordan border is a similar case. Before the conflicts, Iraq was the fourth major recipient of Jordanian goods in value terms, importing around USD540 million worth of commodities each year. However, the vital trade route was cut off in 2015 as unrest escalated. The Turaibil border contributed to the bilateral Jordanian-Iraqi trade exchange, which according to some estimates exceeded USD1 billion in its heyday. Now, with the crossing opening up again, it is hoped that the volume of Jordanian exports will bounce back to their previous levels by the end of 2019.
Jordan’s exports are by no means restricted to low-tech commodities such as minerals and agricultural products. Indeed, Jordan is regarded as a manufacturer of knowledge-based products. Jordanian pharmaceutical products, for instance, are popular in the region due to their quality. However, if the sector wants to keep up with the competition and avoid losing its market to Asian and European brands, more price cuts and quality enhancement measures are necessary. If such steps are taken, Jordanian pharma exports can jump to USD1 billion per year from the current figure—just under USD670 million. Given Jordan’s capabilities for high-tech manufacturing in the Middle East, plastics and electronics are two further promising areas for exports in the coming years.