Jordan

In-depth country-focused analysis on Jordan's economic, political and operational risk environment, complemented by detailed sector insight

Jordan

Our comprehensive assessment of Jordan's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Jordan, as well as the latest industry developments that could impact Jordan's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Jordan before your competitors.

Country Risk

Jordan Country Risk

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Core Views

  • International recognition of a Palestinian state is gathering momentum, a trend that will continue over the next decade and deepen Israel's diplomatic isolation. However, actual statehood remains a far-off prospect.

  • The dissolution of the Palestinian unity government in June 2015, followed by President Mahmoud Abbas' resignation from the chairmanship of his political faction in August, point to a growing governance vacuum in the West Bank and Gaza. The risk of a comprehensive collapse of the Palestinian political system is increasing, amidst a stagnating economy and the multitude of challenges confronting the Palestinian leadership. Tensions between the rival Palestinian factions will remain high, preventing the reconstruction of the Gaza Strip and fuelling political instability.

  • Elevated political risks, a...

Jordan Operational Risk Coverage (9)

Jordan Operational Risk

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BMI View: Jordan's appeal as a location for investment is boosted by the country's relative stability in comparison to neighbouring states. There is little political or sectarian violence, and the government has worked hard to promote internal security with the help of international allies, including the US. Crime rates are relatively low and money laundering, cyber attacks and the activities of criminal gangs do not pose a major risk to legitimate businesses. Nevertheless, Jordan's location in a volatile region, and its participation in campaigns against non-state groups, exposes businesses in the country to the risk of retaliatory attacks, particularly from Islamist extremist group, Islamic State (IS). Consequently, Jordan receives a moderate score of 55.3 out of 100 in the BMI Crime and Security Risk...

Jordan Crime & Security

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With a negligible murder rate of between 1 and 2 per 100,000, and an effective and low corruption police force, Jordan proves to be a low-risk country for investors. Yet despite Jordan possessing very effective intelligence and counter-terrorism agencies, risk does remain in the form of high terrorist threat. In spite of this, Jordan is one of the safer countries in MENA and the Arab world, with the country attaining a security risk score at a low 48.2 out of 100, placing it 83 rd in the world. Regionally, Jordan figures quite highly as it is only bettered by the Gulf states, and thus exceeds all of its neighbours with the exception of Saudi Arabia.

Crimes like robberies and assault appear low but these are potentially opaque, as Jordan, along with several other Arab countries, recognises a process called otwa whereby families resolve disputes among themselves, with minor governmental oversight. This could...

Jordan Labour Market

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Jordan's labour force is, on the whole, well educated and highly urbanised with a high level of primary education and literacy - even in rural areas. Investors will find a readily available pool of skilled and semi-skilled labourers who are cheap to hire and fire. Jordan scores 53.7 out of 100 overall for Labour Market Risk. At 66 th in the world and just behind Mexico, Jordan ranks 6th within MENA, behind Israel and the GCC only (with the exception of Kuwait and Oman). Regionally, Jordan figures highly. Jordan betters two of its neighbours (Syria and Iraq) in every aspect, with a higher availability of labour score than Saudi Arabia and one of the highest educational scores in the region.

While women show higher rates of university enrolment than the regional average, they continue to be relegated to mostly domestic roles. Another negative aspect of Jordan's labour force is the so called brain-drain effect, as many of the more...

Jordan Logistics

BMI View:

BMI View: Jordan's geostrategic location and fairly well-connected road and port networks ensure ready access to major regional and international markets, representing a crucial advantage to businesses based in the country. Trade activities are further reinforced by an efficient trade bureaucracy and governance system, though export procedures are considerably more competitive in terms of costs and document requirements than import procedures. However, planned airport, port and railway infrastructure upgrades will be necessary to preserve Jordan's competitiveness vis-a-vis strong logistics competitors in the region, notably in the Gulf Cooperation Council (GCC). Although Jordan...

Jordan Trade & Investment

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BMI View: Jordan's open economy, low political risk profile and welcoming attitude to FDI make the country an increasingly attractive investment destination within the highly unstable MENA region. The country has enacted a number of investment-friendly reforms over the last two decades, lowering barriers to trade, removing restrictions on foreign ownership, and improving bureaucratic and legal procedures. Investors will also be enticed by relatively low tax rates and generous incentives. Nevertheless, we caution that a number of obstacles continue to obfuscate the operating environment. Chief among these are lingering concerns over corruption, which hinders bureaucratic and judicial efficiency. In addition, the availability of credit remains constrained by tight banking sector regulations and limited access to international financial markets. Overall, Jordan performs relatively well in the...

Jordan Industry Coverage (8)

Autos

Jordan Autos

BMI View:

BMI retains a negative near-term view on the new vehicle sales outlook for Jordan, Lebanon and Syria. This reflects the deteriorating regional economic and political situation. We are now targeting falls in auto sales for all three countries over 2015.

Starting with Jordan, BMI retains a downbeat stance towards new vehicle sales this quarter, as we feel that the growing threat to the Kingdom's borders from ongoing attacks from Islamic State (IS) insurgents more than outweighs what is a reasonably propitious domestic macroeconomic backdrop.

According to an April 2015 report by the Associated Press (AP), ongoing border violence has led to the closure of the sole Syria-Jordan trade crossing, effectively paralysing its overland trade routes. The report also stated that Jordanian exports were already down by 17% y-o-y over the first two months of 2015, before the...

Jordan Autos

BMI View:

BMI View: We hold a relatively cautious stance towards Jordanian new vehicle sales in 2016, with growing fears over the regional security situation outweighing what is a fairly propitious domestic macroeconomic backdrop. For now, we expect a 3.7% fall in new vehicle sales, with several downside risks.

Vehicle Sales 2014-2020
Jordan Vehicle Sales (CBUs)
f = BMI forecast. Source: Renault, BMI
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Commercial Banking

Jordan Commercial Banking

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Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

Defence & Security

Jordan Defence & Security

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BMI View: We expect Jordan's defence budget to continue increasing both in absolute terms and as a share of GDP over the next five years. This will be driven primarily by the country's need to increase its armed forces' capabilities, in order to be able to efficiently contribute to the US-led international coalition's efforts against IS. Thus, whilst little investment will be focused on the development of the domestic defence manufacturing sector, much of the spending will open up opportunities for countries and new defence trade partners to contribute to Jordan's efforts to increase its capabilities.

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Insurance

Jordan Insurance

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BMI View: We have a positive outlook for both Jordan's life and non-life insurance segments. While the relatively smaller life insurance segment is set to outpace non-life insurance, its low penetration and density rates render it considerably underdeveloped, which on the whole translates to fewer investment opportunities for insurance providers. Due to the fragmented nature of the market, incumbents and new (foreign) entrants will likely attain market share by acquiring smaller rivals. The substantially larger and more developed non-life segment will see similar growth rates; however, players will continue to be challenged by the ongoing security situation within the region which is impacting upon Jordan's economic growth and consequently on demand for non-life solutions.

Headline Insurance Forecasts (Jordan 2013-...

Medical Devices

Jordan Medical Devices

BMI View:

BMI Industry View : We expect the Jordanian medical device market to grow at an above average pace of 8.1% per annum to 2019, but the overall market size and per capita spend will remain comparatively small in global terms. The key driver of growth remains medical tourism, for which Jordan is the leading destination in the region.

Headline Industry Forecasts

  • We expect the Jordanian medical device market to expand by a CAGR of 8.1% which should see it rise from an estimated USD268.0mn (JOD190.3mn) in 2014 to USD395.7mn (JOD280.9mn) in 2019. The market is projected to rise from an estimated USD35.7 (JOD25.4) per capita in 2014 to an...

Pharmaceuticals & Healthcare

Jordan Pharmaceuticals & Healthcare

BMI View:

BMI View: Jordan's pharmaceutical and healthcare markets have enormous potential to develop into attractive investment prospects for multinational pharmaceutical companies. The country's domestic pharmaceutical industry will continue to strengthen as consolidation and merger activity increases in the country. Partnership and cooperation will most likely take the form of licensing and regional representation, with the latter potentially giving Jordan 'production hub' status in the region. The government remains committed to healthcare modernisation and expansion, and in order to address the country's leading disease burdens such as diabetes and cancer,...

Telecommunications

Jordan Telecommunications

BMI View:

BMI View: We have revised our forecasts for the Q1 2016 telecoms report update as the Jordanian mobile market performed significantly better in 9M15 than in FY14. In 2014, the market underwent a significant termination of inactive SIMs. All three operators have launched 4G services in the country, a positive development which we believe will empower organic growth. Nevertheless, the market remains saturated with a high degree of penetration and a dominance of the prepaid, low-value sector. Growth will come from 4G services, and a possible move towards converged plans that could drive revenue upwards and keep competition strong.

Saturated Market, But Advanced Data Services Crucial For Growth
2013-2019
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