Jordan’s economy has been hit hard by the COVID-19 pandemic amid already low growth and high unemployment rates. The crisis has had particularly profound impacts on the service sector, travel receipts, and tourism and, with those, the economy in the Kingdom contracted by 1.6 percent in 2020, according to the latest issue of the Jordan Economic Monitor (JEM).

The Spring 2021 edition of the JEM, titled Uncertain and Long Trail Ahead, was launched during a virtual event hosted by the Abdul Hameed Shoman Foundation cultural forum.

This is the first contraction of the economy in three decades but, while historic for Jordan, it is among the lowest economic contraction in the world in 2020. Part of this reduced impact can be attributed to the government’s large fiscal and monetary stimulus packages and targeted cash support to poor and vulnerable households, totaling about 10.5 percent of GDP. The sharp drop in the cost of oil imports also significantly offset losses to Jordan’s economy.

Continuing uncertainty about the path of the COVID pandemic, despite vaccines, and an uneven global recovery are likely to slow the return of contact-intensive sectors, such as services and tourism, with Jordan’s economy expected to recover only gradually, registering growth of 1.4 percent in 2021.

“The Government of Jordan has been able to mitigate some impacts of the crisis through timely and ambitious support programs for affected sectors and vulnerable workers, but challenges remain,” said Saroj Kumar Jha, World Bank Mashreq Regional Director. “The World Bank is supporting Jordan to help it stimulate sustainable job creation and pursue a green and climate-resilient recovery.”

Moving forward, the JEM emphasizes a range of investment-enabling reforms is needed to support strong recovery, given that Jordan was experiencing weakening economic growth and stagnating productivity prior to the COVID crisis. Structural impediments in the labor market had contributed to a steady rise in unemployment—Jordan has one of the world’s lowest levels of female participation in the labor force and high informal employment.

“The current crisis provides a window of opportunity to build back better,” said Saadia Refaqat, World Bank Senior Economist and author of the report. “Jordan needs to focus on reforms that can be felt by Jordanians and the private sector by improving its investment climate to contribute to growth and job creation.”

The Spring 2021 JEM contains two special themes: a snapshot of the private sector and a review of inequality in Jordan and the wider MENA region.

The first looks at the impact of the pandemic on Jordanian firms, with lockdowns and shocks to consumer demand leading to business closures, particularly in the service sector. Although Jordanian firms have introduced new products and used digital technologies, it says the pace of transformation is slower than it could be.

The second focuses on socioeconomic effects of the COVID-19 pandemic. Despite being heralded as the “great equalizer,” the JEM says health and economic impacts of the pandemic have disproportionately affected the poor and vulnerable across the region, amplifying pre-existing inequalities between rich and poor across countries and within them, with potentially long-lasting consequences.