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FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT MAY 2005 AMMAN STOCK EXCHANGE ECONOMIC AND POLITICAL DEVELOPMENTS Economic and Political Environment: King Abdullah II upon ascending to the throne following his father's death in 1999, has provided re-energized economic leadership. King Abdullah, II bin Al-Hussein has proven to be a steadfast proponent of an invigorated program of economic reforms that includes privatization, structural and procedural changes that attract foreign investment and enable foreign debt restructuring and reduction. He also believes that efforts should be continued to build a modern Jordan that provides its men and women with opportunities for a decent life and ensures that the gains of development are distributed equally among the people. King Abdullah belongs to a new generation of Western-educated Arab leaders. The king's political agenda has been focused on economic revival, greater political openness, social justice and equality, in order to clearly place Jordan actively on the regional and international map. While keeping the warm ties with the West nurtured by his father, he has succeeded in improving ties with Syria and the Palestinians and cementing links with Saudi Arabia and Kuwait. Key Information Contacts Jordan Securities Commission www.jsc.gov.jo Securities Depository Center www.sdc.com.jo Jordan Investment Board www.jordaninvestment.com Jordan Country Information www.jordan.jo Central Bank of Jordan (CBJ) www.cbj.gov.jo National Information Center www.nic.gov.jo ECONOMIC RATIOS Domestic savings PAGE 38 Jordan Lower-middle-income group Trade Indebtedness Investment Economic Performance: The real GDP growth by end of the year 2004 was 7.5% compared to 3.3% for 2003. The pickup was due to a huge jump in exports as external demand grew, especially from the United States. In fact, in the year 2004, exports to the U.S. grew by 54%. Jordan conducts its monetary policy with a fixed peg to the U.S. dollar and believes that its trade performance indicates that policy still provides for good international competitiveness of its exports. In the past few years, it has also resulted in virtual stability in the price level with inflation as measured by both the GDP deflator and the CPI registering 1% increases or less and, at times, slight deflation. Meanwhile, CPI inflation in 2004 was 3.3%, up from 2.3% in 2003. As for the fiscal policy performance, re-estimated figures indicate an increase of 14.5% in domestic revenues in 2004 as compared to the year 2003, and a rise of 7.0% in public expenditure, putting the fiscal deficit at US$ 392 million, or 3.6% of the GDP. Jordan's main export commodities are phosphates, fertilizers, potash, agricultural products and textiles. Its main imports include crude oil, machinery, transport equipment, food, live animals and manufactured goods. In 2004, exports (exports and re-exports) grew by 28.2%, and imports increased by 41.5%. Foreign direct GROWTH OF INVESTMENT AND GDP (%) 6 4 2 0 -2 -4 -6 -8 -10 -12 97 GDI GDP investment (FDI) has been increased steadily in recent years. In the first three quarters of the year 2004 it reached US$ 480 million compared to US$ 376 million in 2003. Jordan's gross international reserves have been rising steadily over the past several years, and in 2004, these reserves stood at more than US$ 4.8, equivalent to the value of seven months' merchandise imports. Privatization has moved along quite well. The centerpiece of the program was the sale of a large minority ownership (along with management control) in Jordan Telecom to France Telecom. The government also sold half of its holdings in the Arab Potash Company in mid-October 2003 and a majority of its stakes in its electricity companies in the first half of 2004. Furthermore, a new gas pipeline between Egypt and Jordan has been completed by the private sector, and is expected to be extended to Lebanon, Syria, and Turkey. Even the post office has been put out to foreign management. Several public enterprises are being restructured in 2004 to be privatized in the year 2005. The flow of privatization related funds is earmarked for debt reduction and for funding of development programs under the Plan for Social and Economic Transformation. 98 99 00 01 02 03 * World Bank reports
FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT MAY 2005 AMMAN STOCK EXCHANGE JORDAN GDP/EMPLOYMENT BY SECTOR OF ORIGIN Sector % GDP % Employment Agriculture 3.0 6.4 Industry 25.0 25.0 Services 72.0 68.6 JORDAN MONEY SUPPLY, INTEREST RATES AND FOREIGN EXCHANGE RESERVES GROWTH OF EXPORTS AND IMPORTS (%) 16 12 8 4 0 -4 EXPORT AND IMPORT LEVELS (US$ Millions) 6,000 4,000 2,000 0 97 INFLATION (%) Exports Imports GDP deflator CPI Exports 97 98 99 00 01 02 03 Imports 98 99 00 01 02 03 1998 1999 2000 2001 2002 Money Supply M1 (dinars-billions) 2.027 2.120 2.316 2.92 3.193 Money Supply M2 (dinars-billions) 7.435 7.866 8.419 9.466 10.571 Growth Rate M1 14.0% 4.6% 9.3% 26.0% 9.3% Growth Rate M2 10.0% 5.8% 7.0% 12.4% 11.7% Interest Rates deposit rate 6.50% 5.00% 4.50% 2.50% 3.75% lending rate 11.38% 10.45% 9.85% 8.92% 7.59% Foreign Exchange Reserves (US$ millions) 2,762.6 2,578.4 3,494.6 4,739.5 4,824.3 Exchange Rate Period Average (dinars/US$) 0.709 0.709 0.709 0.709 0.709 Annual % Growth 0.0 0.0 0.0 0.0 0.0 6 4 2 0 -1 CURRENT ACCOUNT BALANCE TO GDP (%) 5 4 3 2 1 0 -1 97 97 98 99 00 01 02 03 98 99 00 01 02 03 * Economic Overview, Country Watch Incorporated, 2005 * World Bank reports PAGE 39
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