Latest news with #RaadMahmoudAl-Tal
Ammon
13 hours ago
- Business
- Ammon
Tariffs and opportunities: What the new US decision means for Jordan
Raad Mahmoud Al-Tal The recent US decision to impose a 15 per cent tariff on Jordanian exports has drawn considerable attention in economic circles. When compared to tariffs on competing countries such as Vietnam (46 per cent), Bangladesh (35–37 per cent), and Egypt (around 10 per cent), it initially appears that Jordan holds a relatively better competitive position in the American market. However, this initial view requires deeper analysis beyond the raw numbers, considering the nature of global competition, the dynamics of the US market, and the competitive landscape Jordan faces. This current "price advantage" offers Jordan a brief respite, especially in the garments and textiles sector, which forms the backbone of Jordanian exports to the United States. Yet, competitors have many tools at their disposal and will not remain passive. Economies like Vietnam and Bangladesh possess massive production capacities, flexible industrial structures, and integrated supply chains, enabling them to absorb tariff impacts by lowering prices, improving efficiency, or obtaining direct and indirect government support. Their economies benefit from economies of scale and robust supply chains that provide greater flexibility in responding to market changes. Egypt, despite having lower tariffs than Jordan, still holds a relatively limited share of the U.S. market, making the tariff effects on it different in nature. The economies of scale these countries enjoy are a strong competitive weapon. Vietnam, facing tariffs up to 46 per cent on some products, can spread costs over huge production volumes, lowering unit costs. Bangladesh, despite higher tariffs (35–37 per cent), relies on low-cost production bases and broad support for its textile sector, allowing it to quickly adjust pricing strategies to maintain market shares. Here lies Jordan's biggest challenge: relying on an advantage stemming from an external political decision. Today's tariffs can be changed or removed tomorrow, and competitor responses may begin to emerge within months through price cuts, logistical moves, or new export alliances. To turn this temporary opportunity into a lasting gain, Jordan must adopt a dual-track strategy. The first track involves short-term tactical measures such as providing temporary financial support to exporters, improving logistical efficiency to reduce shipping costs, and monitoring the U.S. market to counter dumping practices, especially from countries facing higher tariffs. The second track requires long-term structural reforms, including updating production lines, developing workforce skills to meet market standards, increasing local content in products, building Jordanian brands capable of global competition, and diversifying markets to reduce reliance on the U.S. alone. Strengthening Jordan's negotiation capacity in international trade is equally important. This demands specialized technical, economic, and legal teams to craft new agreements and expand preferential access opportunities, thereby protecting Jordanian exporters' interests and supporting sustainable growth in export sectors. The equation is clear: current tariffs grant Jordan a temporary price advantage compared to Vietnam and Bangladesh, but a smaller edge relative to Egypt. However, true competition is not decided by numbers alone, but by the economy's ability to build lasting productive and marketing advantages. If Jordan seizes this moment to build a more efficient production base and convert current price gains into real competitive strength, the new tariff could mark the start of an expansion phase in the U.S. market and possibly beyond. Otherwise, relying solely on temporary external circumstances risks losing market share as soon as the rules change.
Ammon
4 days ago
- Business
- Ammon
Capital spending in Jordan: Can it drive the Economic Modernization Vision?
Raad Mahmoud Al-Tal Capital spending plays a pivotal role in fostering economic growth and realizing national development strategies. In Jordan, however, recent analysis by the Jordan Economic Forum reveals a widening gap between the ambitions of the Economic Modernization Vision and the reality of how capital expenditures are planned and allocated. This disconnect raises critical concerns about the government's ability to steer the economy toward a productive and sustainable path. According to the policy paper, Jordan's capital expenditures have remained largely stagnant over recent years, fluctuating between JD 1.1 billion and JD 1.5 billion. While spending peaked in 2022 at JD 1.512 billion, it declined to JD 1.468 billion in the 2025 draft budget. This inconsistent trend highlights the absence of a medium- or long-term public investment strategy, undermining the stability and continuity required for effective development planning. Without a strong institutional framework to guide investment and evaluate outcomes, major projects risk delay or inefficiency. When viewed in a global context, Jordan's capital spending is modest. Over the past decade, capital expenditure as a share of GDP has ranged between 2.7 per cent and 4.6 per cent—significantly below the 5 per cent to 7 per cent range typical for developing countries. This underinvestment limits the state's ability to stimulate growth, create jobs, and reduce regional disparities. Instead, the economy remains dependent on current expenditures and consumption-led growth—an approach that falls short of the modernization vision's aspirations. The structure of Jordan's capital spending also reveals significant imbalances. A large share of funds is directed toward economic affairs, infrastructure, and general public services. Meanwhile, some essential sectors such as environmental sustainability and social protection receive less than 2.5 per cent of total capital expenditures in the 2025 budget. These sectors are key to inclusive and resilient development, and their marginalization signals a continuation of outdated spending priorities. This misalignment is particularly evident in the lack of funding for projects related to innovation, entrepreneurship, and sustainable resources—core elements of the modernization agenda. Approximately 19.2 per cent of capital expenditures are allocated to sectors that are not directly connected to the vision's strategic priorities. Geographic distribution of spending presents another major challenge. Around 90 per cent of capital expenditures are allocated to central government projects, leaving just 9.2 per cent for governorates. Such centralization exacerbates regional disparities, limits local development opportunities, and reduces the responsiveness of public investment to community needs. To address these challenges, the policy paper offers a series of important recommendations. These include developing a medium-term strategic framework for capital spending, gradually increasing capital expenditure to 6 per cent of GDP by 2030, and realigning spending priorities with the modernization vision. It also proposes the creation of an independent investment fund for strategic projects, expanding the role of the private sector and international financing in development, and increasing the governorates' share of capital spending to at least 25 per cent. If implemented effectively, these reforms could enhance the efficiency, equity, and impact of public investment—providing the Economic Modernization Vision with the financial tools it needs to succeed. However, achieving this will require more than technical adjustments. It calls for a strong institutional commitment to rethinking how public funds are allocated, and ensuring that investment decisions are guided by long-term national priorities rather than short-term constraints. Ultimately, the issue is not simply the amount of capital spending, but how it is allocated, implemented, and monitored. Without structural reform in the management of public investment and stronger partnerships with the private sector, the gap between ambition and reality will persist. Without such reforms, the promise of modernization risks remaining unfulfilled.
Ammon
03-08-2025
- Business
- Ammon
The global economic battle between the U.S. and China
Raad Mahmoud Al-Tal More than six months after the latest round of tensions between the United States and China, it's clear that this is more than just a trade dispute. It has become a larger fight over who will lead the world economy and technology in the future. The U.S. wants to slow down China's rise by adding trade and tech restrictions. China, in return, is trying to protect its economy through stimulus plans, finding new markets, and becoming more self-reliant. In the second quarter of 2025, China's economy grew by 5.2%. This was slower than the 5.4% in the first quarter, but still better than experts expected. However, some signs of weakness are showing—exports are slowing down, consumer confidence is dropping, and prices are falling. On the other hand, the U.S. economy grew by 3.0% in the same quarter, supported by strong consumer spending and a steady job market. Since 2018, the U.S. has put tariffs on hundreds of billions of dollars' worth of Chinese goods. China hit back with its own tariffs, especially on American farm products. As a result, many companies started moving their factories to other countries like Vietnam, India, and Mexico. China responded by boosting its own industries especially in important areas like semiconductors and green energy through a strategy called 'Made in China 2025.' The trade war has affected many industries. In the U.S., companies that rely on Chinese parts like tech and car firms faced higher costs. Farmers lost business because of China's tariffs, which forced the U.S. government to offer billions of dollars in financial help. China also suffered from weaker demand for its goods abroad, but tried to make up for it by building more infrastructure, cutting interest rates, and giving tax breaks to encourage innovation. Now, both countries are trying to reduce their economic ties to each other. For example, China's share of U.S. imports dropped from 21% in 2017 to less than 14% by mid-2025. This shows that U.S. efforts to reduce dependence on China are working to some extent. Looking to the future, there are three possible paths. First, tensions could rise, which would hurt both economies and the global market. Second, the two sides might reach short-term deals without fully solving the problem. Third, they could continue slowly separating their economies, which could reshape global trade and create new chances for other countries. Right now, there's no clear winner. The U.S. has strong financial tools to handle economic pressure, and China is showing flexibility by adjusting its policies. But the conflict is expensive for both, and the effects are being felt around the world. This trade war has become a long-term strategic competition that will help decide who leads the global economy and technology in the years ahead.
Ammon
31-07-2025
- Business
- Ammon
Reframing economic reform: A Central Bank perspective on Jordan's transformation
Raad Mahmoud Al-Tal In a rapidly evolving global economic landscape, the recent remarks by the Governor of the Central Bank of Jordan, Adel Sharkas, offer a clear signal that Jordan has embarked on a fundamentally new path of economic reform. The country has shifted away from reactive, short-term policy adjustments toward a proactive and strategic reform agenda, guided by the Economic Modernisation Vision. This transition has not only redefined national economic objectives but has also introduced a new set of tools and implementation mechanisms. This transformation can be understood through three interrelated pillars. First, Jordan has adopted a forward-looking approach that prioritises economic resilience in the face of external shocks. Second, macroeconomic stability has been reestablished as the cornerstone of long-term, sustainable growth. Third, the coordination between fiscal and monetary policy has evolved into a coherent, integrated framework designed to support reform over the medium and long term. Jordan's recent growth performance, averaging 2.9 per cent during 2021–2024, is not simply a rebound, it signals a structural shift. The growth trajectory has become broader-based and more externally driven, with investment contributing around 40 per cent and the external sector 38 per cent to overall growth during this period. This indicates that the economy is gradually becoming less reliant on domestic consumption and public expenditure and more rooted in productive, scalable sectors. This shift reflects the cumulative impact of structural reforms that have enhanced productivity and invested in human capital—key components of what economists refer to as potential output. In effect, Jordan is building the capacity to sustain growth without triggering inflationary pressures. On the external front, the economy has shown notable resilience. Non-traditional exports have increased their share of GDP from 16.2 per cent in 2016 to 20.9 per cent in 2024. The energy bill has been significantly reduced—now at 7 per cent of GDP—due to long-term gas agreements and a diversified energy mix. Additionally, workers' remittances, a vital source of foreign exchange, have remained strong, totaling $3.6 billion in 2024. Monetary policy has played a crucial role in this stabilization. Inflation has been contained at approximately 2 per cent in the first half of 2025, despite global price pressures. Foreign currency reserves, now exceeding $22 billion, provide more than eight months of import coverage. The decline in dollarization to 18.1 per cent further underscores growing confidence in the Jordanian dinar. The banking sector, too, has emerged as a pillar of stability and growth. Bank deposits have reached 47.7 billion dinars, while credit facilities have expanded by over 7 billion dinars since 2020. Jordan has also made significant strides in digital financial services, with digital payment volumes now equivalent to 146 per cent of GDP a reflection of improved access, efficiency, and innovation in the financial ecosystem. Importantly, the Central Bank of Jordan is no longer functioning solely as a regulator, it has become a strategic partner in the country's reform agenda. Its leadership in promoting financial inclusion, digital transformation, and monetary stability reflects a proactive institutional role aligned with national development priorities. Governor Sharkas's address is not just a summary of economic metrics; it is a clear statement that Jordan is gradually breaking free from its historic vulnerabilities. The country is laying the groundwork for a more resilient, self-sustaining economic model capable of withstanding future uncertainties. However, the road ahead is not without challenges. Sustaining this progress requires institutional continuity, deeper public-private collaboration, and a cultural shift toward long-term economic thinking. Ultimately, it is not just reform policies, but a broader economic mindset that will define Jordan's ability to navigate the next decade.
Ammon
24-07-2025
- Business
- Ammon
Economic Discussions at the Royal Court
Raad Mahmoud Al-Tal Three years ago, the Royal Hashemite Court launched the Economic Modernization Vision (EMV) to improve Jordan's economy and make it stronger and fairer. Jordan faces many problems such as high unemployment, slow economic growth, and limited government funds. The Royal Court's role is not just to oversee government work. It brings together the government, businesses, and society to discuss and find real solutions that meet people's needs. These talks focus on key issues like making it easier to do business and attract local and foreign investment. They also work on improving important areas like industry and farming and helping more people, especially young people and women, join the workforce. They want to reduce reliance on foreign workers who are not well regulated. Another important goal of these discussions is to create a more balanced and fair labor market. Many Jordanians, especially in rural areas, struggle to find decent jobs. By focusing on local economic development and encouraging small and medium-sized enterprises (SMEs), the vision aims to spread growth more evenly across the country. Supporting entrepreneurship and innovation is also part of this effort, helping people turn ideas into jobs and businesses. The talks also stress the need for big changes in the economy's structure to keep growth steady. This means not just improving numbers but making the economy strong against shocks and able to attract investors. Education and job training are priorities to prepare people for future jobs and lower unemployment. These discussions give space for public and private sectors to share ideas and make sure policies fit the real market and work well. Improving investment means making rules simpler, cutting hidden costs, and fixing business laws. The talks produce advice for the government to create clear labor market rules, increase transparency, expand social safety nets, and offer training for Jordanian workers. They also explore ways to give tax breaks and other benefits to encourage hiring Jordanians. There are challenges like limited funds, a slow global economy, and regional problems. But working together with accurate data and openness helps Jordan grow steadily and create real jobs. These talks at the Royal Court are a good step toward modernizing Jordan's economy. If done well, this plan will boost economic stability, improve people's lives, and guide Jordan to a better future.
