Outlook for 2011-15

• Power in Jordan is expected to remain firmly in the hands of the king, Abdullah II, who will retain the loyal support of the army and the security services.
• The new government, appointed in response to popular demonstrations in January 2011, will attempt to balance tactical political concessions with its long-standing priority of economic reform.
• Jordan's fiscal deficit is expected to remain wide over the forecast period, averaging 5.6% of GDP a year (including grants), as revenue growth is held back by sluggish economic expansion.
• The Central Bank of Jordan will retain a relatively loose monetary policy, in an effort to encourage commercial bank lending.
• Although it will recover over the forecast period, real GDP growth is likely to remain below the highs of 2004-08, as the economy struggles because of weak public spending growth and the end of the construction boom.
• We have revised higher our inflation forecast for 2011 to an average of 6.6%, in line with an upward adjustment to our projections for global commodity prices. Overall, we expect inflation to average 4.9% in 2011-15.

Monthly review

• Anti-government protests have taken place around Jordan, mimicking similar protests in Egypt and Tunisia. The demonstrators protested against high prices, unemployment and corruption and demanded political reform.
• King Abdullah has responded to unrest by sacking the prime minister, Samir Rifai, and his government on February 1st. A former prime minister, Marouf Bakhit, has been asked to form a cabinet prioritising political reform.
• The government has produced two economic packages, worth a combined JD460m (US$649m) in 2011 alone, to alleviate the economic concerns of protesters.
• The US government has announced it will give Jordan an additional US$100m in aid, directed at Jordan's health and education services.
• The US Heritage Foundation has ranked Jordan 38th in the world in its 2011 Index of Economic Freedom. It was 4th out of 17 Middle Eastern countries and showed the greatest improvement in the region in 2010.
• Jordan's Ministry of Tourism has released figures showing a sizeable increase in visitors in 2010, with tourism revenue up by 17%. These gains could yet be checked by a regional decline in tourism following unrest in Egypt.

King Abdullah II is expected to remain in power throughout the forecast period and beyond, supported by his loyal, well-trained and effective armed forces. Nevertheless, threats to stability will persist, with periodic outbursts of Islamist violence possible, although these are most likely to be the actions of aggrieved individuals (rather than organised groups), and the general threat to security is fairly low. Despite elections returning a loyalist parliament in November 2010, the new government was rocked in January 2011 by popular demonstrations inspired by similar protests in Tunisia and Egypt. In response to the protesters, who were complaining of rising unemployment and corruption, the king dismissed the unpopular prime minister, Samir Rifai, on February 1st. Mr Rifai's successor, Marouf Bakhit (who was previously prime minister between 2005 and 2007), faces the difficult task of balancing the democratic demands of the protesters with long-standing government priorities of economic reform and development.

In response to the protests, King Abdullah tasked Mr Bakhit with advancing ''real political reform'', and increased fuel and food subsidies and civil service pay to quell opposition. The Economist Intelligence Unit expects spending priorities to be revised and some reversals in previous government spending cuts. Strategic political concessions can also be expected, although a widespread democratic opening is unlikely. Alongside this, the government will continue to pursue a "decentralisation" strategy, designed to increase popular participation in decision-making at the local level. In reality, however, it is the king who shapes policy in the country, and he will seek to maintain tight control over the organs of state, while offering tactical concessions to reduce popular unrest.

The outcome of the November 9th election produced few surprises, largely because of the newly amended electoral law. The new law, like the previous one, discriminates in favour of rural areas, which has in the past resulted in a legislature dominated by loyal, but economically conservative, members of parliament (MPs). The amended law, released in May, does not revert to a more proportional system. Like the old law, it keeps in place the single non-transferable vote (known locally as "one person, one vote") formula that the opposition parties insist favours tribal candidates over the parties. It included clauses intended to allay opposition concerns, including increasing the number of seats in the elected lower house, the Chamber of Deputies, from 110 to 120, and allocating four new seats to the cities of Amman (the capital), Zarqa and Irbid. The leading opposition party, the Islamic Action Front (IAF), might have benefited from an increased seat quota in Zarqa, a city that has traditionally been a stronghold for them, but boycotted the election in November, citing the government's gerrymandering of electoral districts. The IAF's fortunes have been hindered recently by worsening internal splits between moderates and hardliners-the latter are seeking to align the group more closely with Hamas, a militant Palestinian movement. However, the IAF secretary-general, Hamzah Mansour, did present a united front during the January protests, in which he played a prominent role.

The king will be wary of fundamentally altering the balance of power in the country at his expense, and will seek to quell any large-scale influx of ethnic Palestinians into sensitive organs of the state. The new parliament looks very similar to the previous one. The lower house is dominated by loyalist and tribally oriented members, and as such will probably fail to meet the political aspirations of the increasingly educated and sophisticated electorate in Jordan's major cities. For these reasons demonstrators in January called for parliament to be dissolved and fresh elections to be called under a revised election law.

Jordan's pro-Western orientation will remain the cornerstone of the king's foreign policy, complemented by a policy of maintaining good relations with all Middle Eastern states in order to prevent regional tensions having a negative effect on the country. Jordan's ties with the US have been buttressed by the increased attention given to the Israeli-Palestinian conflict by the US president, Barack Obama. However, the Jordanian public will be sceptical about the outcomes of the recent peace negotiations-in particular because of the US's perceived bias in favour of Israel-which are currently suspended. Recent disruption in Egypt is likely to strengthen US-Jordanian ties in the short term as the US seeks to consolidate its regional alliances. Ties with Iraq will continue to improve as commercial links between the two countries deepen, although Jordan will be wary of any resurgence in violence in Iraq. The seating of a new Iraqi government should yield some increased stability in the country, and could lead to Jordan reaping further benefits from increased trade between the two countries. The king may have a sympathetic ear in the White House, but Jordan's direct influence on the myriad conflicts and rivalries that afflict the region will be limited, given the leadership's unwillingness to jeopardise its peace treaty with Israel and its reliance on the US (and Saudi Arabia) for financial aid.

Government attempts to liberalise the economy will probably be impeded in the short term by political concessions made following the January demonstrations. After shielding the population from the impact of the economic downturn in 2008-09, the priority in 2010 was to push ahead with economic reform. Aware of the large fiscal deficit, the government sought to rein in social-security outlays, exemplified by the introduction of a temporary law in October 2009 raising the minimum retirement age. It may have trouble getting these changes passed into law, however. The make-up of the new parliament strongly resembles the previous one, which was lethargic in tackling economic reform, contributing to the king's decision to dissolve parliament two years early. On top of this, economic promises made in response to the January demonstrations will force some revisions of these deficit-cutting measures.

Attempts to encourage greater private-sector involvement (including through public-private partnerships) in public service provision will proceed slowly, given the increased risk aversion of private businesses and the financial sector, and political pressures will preclude any major cutback in the state's bloated public-sector payroll. As a result, the government will remain heavily reliant on foreign grants to cover its deficits. This dependence has caused it considerable problems during the global recession, when such assistance fell sharply, but inflows rebounded in 2010, and are expected to continue to recover over the forecast period. Foreign aid from the US and Saudi Arabia may increase further in the wake of the Egypt crisis as they seek to ease domestic pressure on their Jordanian ally.

The government's desire to keep a tight rein on spending in 2011-12, in an effort to bring the fiscal deficit down, will be challenged by new spending commitments made during the January protests. The government introduced a reduced budget for 2010 but the 2011 budget included an increase of over 6% on the previous year, with a 22% rise in the capital allocation, signalling a considerable easing of fiscal policy. Reducing the deficit will remain a significant hurdle in 2011-12; we expect the government to rein in spending in 2012, although it will make some small, incremental increases in capital and defence outlays. Fiscal revenue (including grants) rose by an estimated 4.9% in 2010, following a large dip in growth in 2009, and will increase by an average of 6% in 2011-12.

With signs that the government is willing to maintain tight control of recurrent spending, which as a proportion of GDP fell by 0.5 percentage points in 2009, we expect the deficit (excluding grants) to narrow from an estimated average of 10.4% of GDP (JD1.6bn; US$2.3bn) in 2009-10 to an average of 8.3% of GDP in 2011-12. This is larger than we previously forecast owing to the government's recent spending pledges. The deficit including grants will be lower, averaging around 6.3% of GDP. With improving revenue growth in the second half of the forecast period, we expect the government to increase expenditure, but the fiscal deficit will narrow further, averaging around 6.9% of GDP (excluding grants) in 2013-15. Jordan will remain heavily reliant on foreign largesse to cover its deficits. In 2008 the government was successful in securing assistance (mostly from the US and Saudi Arabia), with foreign grants more than doubling to JD718m (US$1bn). However, the weak global economic climate meant that such grants plummeted in 2009, though they have since improved. The Egypt crisis could prompt a further increase in grants from the US and Saudi Arabia. Elsewhere, the government will continue to rely heavily on the domestic banks to secure debt finance, although it has recently successfully issued a US$750m bond, its first on the international market, which was heavily oversubscribed.

In an effort to protect the banking sector from the fallout from the global financial crisis, the government extended its guarantee of all bank deposits until end-2010. Jordan's banking sector seems to have weathered the worst of the economic downturn, allowing the government to remove the guarantees in January 2011. Local banks have only limited exposure to the financial products that caused a raft of bank failures in the EU and the US. However, there are concerns that problems closer to home, primarily in Dubai, could create difficulties for Jordan's biggest bank, Arab Bank. Although Jordan's banks are well capitalised and have built up a precautionary cash pile over the past year, the government would be hard-pressed to prop up a bank of the size of Arab Bank if it did hit difficulty.

With domestic banks still reluctant to lend, and the spreads between commercial bank lending rates and its policy rate remaining wide, the Central Bank of Jordan (CBJ) has modified its generally conservative monetary stance. Citing an easing of consumer prices, it has reduced rates by 250 basis points since November 2008. The most recent cut was made in February 2010. This policy has been complemented by the decision to lower banks' reserve requirements. We believe that the Central Bank will keep rates low throughout 2011, but will shift its focus to an anti-inflationary strategy from 2012, in tandem with the start of rate rises by the Federal Reserve (the US central bank). However, given that banks have thus far not responded to government demands that they reduce their lending rates in line with CBJ cuts, commercial bank lending rates are expected to remain relatively constant throughout the forecast period, averaging 9% in 2011-15.

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Although it will recover in 2011-12, the economy will struggle in the face of limited government spending growth and the end of the construction boom, despite recently announced current spending rises following the January protests. In recent years, Jordan's growth rate has been lifted by a strong upturn in foreign direct investment, especially from the Gulf Arab states. However, with their spending being eroded by slower growth since the global economic downturn of 2008-09, inflows from the Gulf have dropped. Such flows are expected to recover by the end of the forecast period, although they could be affected by a possible decline in tourist arrivals, if the domestic and regional political situation worsens.

Exports will be constrained by sluggish growth in the US, but this should be partly offset by fast-rising demand for Jordanian goods from neighbouring Iraq, which will in turn boost activity at the Aqaba Container Terminal, currently undergoing relocation and development. Overall, we estimate that economic expansion reached 3.2% in 2010, and forecast that it will rise slightly in 2011, to 3.8%, as a number of Jordan's export markets begin to strengthen and domestic construction activity picks up again. Even though we forecast that real GDP growth will pick up later in the forecast period, with the economy expanding by an average of 4.7% in 2012-15, it will remain well below the stellar levels witnessed in the five years before the downturn. The difficult global economic situation and government spending cuts (albeit possibly deferred this year) are also likely to depress consumer confidence, although the effect of this should fade in the latter part of the forecast period.

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Consumer price growth has fallen back since the start of 2009, reflecting lower international oil and food prices, as well as the strengthening US dollar. However, having fallen by an average of 0.7% in 2009, the consumer price index increased by an average of 5% in 2010, as commodity trends reversed during the year. In 2011 we expect average inflation to rise to an average of 6.6%-slightly above our previous forecast-as the recent introduction of higher price subsidies fails to offset the impact of rising commodity and oil prices. We expect price growth to remain fairly stable throughout the remainder of our forecast period, averaging 4.5% in 2012-15, kept in check partly by the depressing effect on wages of the many new returnees from the Gulf. In addition, the decision of the government in December 2008 to delay the implementation of the Landlord and Tenant Law (which stipulated that all rents fixed before 1987 would be unfrozen from end-2010) to end-2013 will increase inflationary pressure from 2014.

The CBJ is committed to the maintenance of the Jordanian dinar's peg to the dollar, despite the associated lack of monetary flexibility. The peg has instilled monetary confidence and has not substantially harmed competitiveness (perhaps because the US is one of Jordan's largest single export markets). Although the IMF has raised the issue of abolishing the peg during its annual Article IV consultations with the Jordanian authorities, on balance the Fund has come down in its favour on the grounds that it has ensured stability, and has helped to build confidence in the Jordanian currency over the past decade. In addition, according to the IMF, at present there is no evidence of a misalignment of the peg. As a result, we expect the CBJ to maintain the peg at JD0.709:US$1 throughout the forecast period. We also believe that the stock of international reserves will be sufficient to offset any pressure on the currency stemming from short-term liquidity problems or negative political developments.

Exports will grow by an annual average of 8.4% in 2011-12, reaching US$8.6bn in 2012, as recovering demand in Asia and increased re-export trade with Iraq make up for sluggish demand in the US. Having fallen by almost 20% in 2009 on the back of lower oil prices and the resumption of discounted oil supplies from Iraq, the import bill began to grow once more in 2010 as commodity prices recovered, and will continue growing in 2011-12, rising by around 7% a year. But it is highly unlikely to replicate the sharp rises witnessed in 2007-08, and could even fall once more if the supply of discounted Iraqi crude is stepped up-at present around 10,000 barrels/day (b/d) are being trucked over from Iraq, but the plan is for this to reach 30,000 b/d. The growth in exports will offset the rise in imports in 2011-12, and the trade deficit will stay relatively flat in the second half of the forecast period, averaging around US$6.9bn in 2013-15, as exports are boosted by strengthening global demand, in line with the global economic recovery.

On the invisibles side, workers' remittances are likely to rise slowly, having fallen back in 2009 following the downturn of the Gulf Arab economies. Tourism receipts are also expected to grow, albeit less quickly than before the global recession, though the industry could be affected by recent regional popular demonstrations. Overall, we forecast that the current-account deficit will narrow gradually, from an estimated US$975m (4.3% of GDP) in 2010 to an annual average of about US$552m in 2011-12. We expect the current-account position to improve over the forecast period, moving into surplus in 2015.

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The government might have been forgiven for anticipating a relatively smooth start to 2011 following a record vote of confidence for the prime minister, Samir Rifai, and his cabinet in late December. Yet even before the outbreak of anti-government demonstrations following similar protests in Tunisia and Egypt, deputies were calling on the prime minister to undertake comprehensive reforms to tackle corruption and high unemployment. Riots in the southern city of Maan further underlined existing tensions. The public demonstrations that led to the deposition of the Tunisian president, Zine el-Abidine Ben Ali, in early January, followed by protests against Hosni Mubarak in Egypt, encouraged Jordanians to take to the streets to demand reform and Mr Rifai's resignation. Following weeks of pressure, King Abdullah II suddenly dismissed Mr Rifai and his cabinet on February 1st, appointing the former prime minister and national security chief, Marouf Bakhit, instead.

King Abdullah plays it safe

Jordan did not witness the same level of protest seen in Tunisia and Egypt in January, but a steady stream of street demonstrations led by the Islamic Action Front (IAF), professional associations, retired generals, leftist parties and users of social networking sites placed considerable pressure on the government. On February 1st King Abdullah II suddenly dismissed the unpopular prime minister, Samir Rifai, one of the opposition's key demands. Mr Rifai had only recently been reappointed following the parliamentary election in November 2010 that were boycotted by the IAF, the largest organised opposition force. In an apparent response to growing calls for reform, the state-controlled Jordan News Agency (Petra) said that the new government headed by Marouf Bakhit, who had previously been prime minister, would launch a "real political reform process". However, it is doubtful whether such a pledge carries much credibility.

Mr Bakhit is hardly a breath of fresh air. He is from the loyal Al Abbadi tribe and is part of the East Bank tribal elite that has dominated Jordan since independence. Moreover, he had already held the post before, in 2005-07, and earlier had been head of national security and taken on the difficult role of ambassador to Israel. Some members of the opposition were not impressed by the king's shuffling of the ministerial deck. Within hours of Mr Bakhit's appointment, the IAF dismissed the move as ''inappropriate'', bringing attention to allegations of corruption and electoral fraud during Mr Bakhit's previous term in office. However, divisions in the opposition did appear shortly after Mr Bakhit's appointment. Although the IAF and leftist parties vowed to continue their demonstrations, other opponents, notably a group of retired East Bank military figures who had become active in the protests, agreed to suspend their participation to give the new prime minister time to initiate reform.

Although this new cabinet could well bring about the changes demanded, the king's choice of prime minister says much about his approach to this emerging crisis. Mr Bakhit was first appointed prime minister in the immediate aftermath of the 2005 bombings in the capital, Amman, and is seen by the monarch as a safe pair of hands. With his military background, Mr Bakhit's appointment suggests that the Jordanian monarchy is pursuing a similar survival strategy to that used by Hosni Mubarak in Egypt: drawing on its core military supporters by appointing key military figures to senior government posts. Under Mr Rifai, who is of Palestinian origin, the government was led by technocrats and businessmen, prompting criticism from the monarchy's traditional East Bank military establishment supporters that King Abdullah was being too pro-Palestinian. By appointing Mr Bakhit, with his East Bank tribal and military ties, the king is shoring up his position.

Anti-government demonstrations in Tunisia and Egypt concerned the Jordanian regime even before protests erupted in Jordan itself. As in Egypt, Jordanians face severe economic pressures as prices rise and job growth remains sluggish, while the Palestinian-Israeli conflict has always added a strain on Jordan's political life. Cognisant of this, King Abdullah initially instructed the government to take measures to keep prices under control and create new jobs in early January. Then, as the situation in Tunisia and Egypt became more serious, a second package of measures was announced that included pay rises for civil servants and further price controls (see Economic policy).

The measures were welcomed, but few saw them as anything more than a palliative gesture, and opposition groups went ahead with demonstrations against government policies. The first protests were marked by a division between the IAF and the professional associations, and leftist political groups, with the latter organising their rally on January 14th and the IAF and the professional associations staging a separate event on the following Sunday. The next week, the IAF joined other groups when 5,000 Jordanians took to the street in the capital, Amman, in a demonstration that included the full political spectrum. The week afterwards, 3,500 people demonstrated in Amman and a further 2,500 in six other Jordanian cities. The demonstrations were generally peaceful, and the police and security forces even offered protesters water and fruit juice during the January 21st event.

The government was keen to diffuse tensions, allowing the demonstrations to go ahead and permitting a televised debate between the deputy prime minister, Ayman Safadi, and the IAF secretary-general, Hamzah Mansour. Mr Mansour used the debate to question the legality of the current Jordanian parliament and to push for wide-ranging political reform, claiming large-scale fraud during the November 2010 election and demanding new elections under a reformed electoral law. He said that the IAF was willing to take part in the political reform process. Mr Safadi defended the government against the claims of fraud, saying it was unacceptable for a party that fails to gain seats in an election to question the integrity of the process. The two men differed strongly on Jordan's economic situation. Mr Mansour suggested that the Jordanian economic system was falling apart, but Mr Safadi pointed to average growth of 6% in the past decade and the success of sectors such as telecommunications.

During the street protests, the opposition had been calling for the resignation of the unpopular prime minister, Samir Rifai, and action against rising prices, inflation and unemployment. As the demonstrations intensified, the IAF upped its demands to constitutional amendments that would limit the king's power to appoint the prime minister. Mr Mansour was, however, keen to stress differences between Jordan and Egypt, where protesters had demanded the president's resignation. He repeatedly stated that the king's position was respected and that the IAF did not seek to overthrow the monarchy, just to curb his direct power.

Prior to the Amman demonstrations, the southern city of Maan witnessed a spate of violence in early January following two deaths during a brawl between members of two southern tribes. Some Maan residents were angered at the police's failure to arrest those responsible for the deaths, and their protests escalated into two days of anti-government demonstrations. A few days later, a meeting of community leaders and representatives of civil society organisations in the Maan governorate called for ''in-depth'' studies to examine the reasons behind the violence and for urgent plans to deal with poverty and unemployment. The Maan trouble was the latest of a series of local disputes that have escalated into anti-government protest and street violence and are generally seen as evidence of the loss of confidence in the state by traditionally loyal tribal Jordanians.

Jordan's fiscal policy showed signs of unravelling in January as rising complaints about fuel and food prices forced concessions from the government. When he presented the budget to parliament in late December, the then finance minister, Mohammed Abu Hammour, was positive on reducing the deficit while still promoting growth in 2011. However, following the protests, the government produced two economic packages in short measure that will cost the Treasury an estimated JD460m (US$649m) in 2011 alone and may force a rethink of its spending priorities. There were calls for the reinstatement of the Ministry of Supply and the introduction of price controls, measures that would push the country back to protectionist policies while doing little to boost economic activity.

An IMF statement issued on January 9th following a visit to Jordan in December suggested that it was in accord with the government's approach to fiscal management and its expected outcomes. The IMF suggested that the deficit was likely to narrow to 5.3% of GDP in 2011 and supported Jordan's goal of reducing the overall deficit by between 0.5% and 1% of GDP per year, with the aim of bringing it down to about 3% of GDP over the medium term.

The IMF might have reached a different conclusion if its mission had taken place in late January. Jordan's parliament had not even managed to debate its provisions before political events were blowing major holes in the government's spending expectations. In late December following the regular monthly review of energy prices, the government announced a rise in petrol, diesel and kerosene prices, and food prices had been increasing as well. As the trouble in Tunisia and Egypt continued, King Abdullah was clearly not willing to take any chances that it would spread to Jordan, and he told the government to take steps to bring the cost of living down. On January 12th the cabinet announced a package of measures that included the cancellation of a special sales tax of 6% imposed on kerosene and diesel, and a reduction in the tax on 90-octane petrol from 18% to 12%. The government also promised JD20m to hold down the price of essential commodities such as sugar, rice and frozen poultry. It allocated a further JD20m to support income-generating projects in poor areas starting from February.

The government also decided to ease conditions for hiring in the education, health and social development ministries to allow holders of two year diplomas from disadvantaged areas to obtain jobs, although it did not say how many jobs would become available. When he unveiled the new measures Mr Abu Hammour said they would cost JD160m in 2011 but would not affect the deficit as the government would reset its spending priorities.

On January 21st the government announced a new package of measures, including a JD20 a month salary increase for public sector employees, members of the armed forces and pensioners that will in total cost JD160m annually. In addition the government committed itself to maintaining a subsidy on gas cylinders at an annual cost of JD100m and on fodder at a further JD40m. The interest rate on loans extended by the Agricultural Credit Corporation was reduced by 1% for loans of JD10,000 and over, while the government promised there would be no increased electricity tariffs in 2011.

With this in mind, it was hardly surprising that fuel prices were left unchanged when the regular monthly review of prices was carried out in late January. The Petra news agency reported that prices would remain at their current levels at least until March 3rd, despite the fact that the cost of oil derivatives had risen by between 3.8% and 4.9% during the previous month in response to rising global oil prices. The Finance Ministry of Finance will have to find JD6m needed to cover the increase.

The day after it announced its first package of measures, the government received a modest contribution towards meeting its new commitments when the US government announced it was providing US$100m in aid. The US embassy in Amman said that the money was for Jordan's health and education services and to promote economic and political development. With the political turmoil among key allies of the US continuing throughout the region, Jordan can be expected to approach the embassy, and those of the EU states and the Arab oil producers, for more support in the coming months.

Despite the complaints from protesters over the state of the economy, the government will have welcomed the latest Index of Economic Freedom from the Heritage Foundation, a conservative US think tank. The Jordanian economy was ranked as the 38th freest in the world, and 4th out of 17 Middle Eastern countries. It had shown the greatest improvement in the region in 2010. However many of the elements that contributed to this improved rating are precisely those that some Jordanians would highlight as contributing to their tougher economic conditions, including public wage bill containment, capital spending reduction, privatisation, market liberalisation and private-sector development. Jordan scored well on fiscal reform and monetary, trade, labour, investment and business freedom. The area where the report and most Jordanians would agree was the assertion that overall economic freedom is limited by corruption, the category in which Jordan scored lowest, and the judicial system's vulnerability to political influence.

As the calls for economic change continued in Jordan, the then prime minister, Samir Rifai, was in Qatar promoting a key government aim of recent years, encouraging investment from the oil-rich Gulf economies. In an interview with a Qatari Arabic-language daily, Al Sharq, Mr Rifai said that his talks with Qatari leaders would tackle various joint ventures, including a proposed Qatari-Jordanian Investment Fund, a regional railway link, water and nuclear energy projects and the Red Sea-Dead Sea canal project.

A joint venture between a Jordanian firm, Dar Al Omran Infrastructure and Environment, and the engineering arm of the Italian State Railways Group, Italicize, has won a contract to produce a feasibility study of the proposed Arab railway network project. The contract, worth approximately EUR2m (US$2.5m), is being financed by the Arab Fund for Economic and Social Development. The study is due to take one year and will evaluate the situation of railways in the region, the feasibility of the network and the estimated costs of a railway network for both passenger and freight services extending from North Africa across to the Gulf states. It is not clear how the Arab League-sponsored project would connect with a number of individual national railway projects already under development across the region.

The Ministry of Tourism has announced that tourism enjoyed a strong 2010, with revenue up by 17% to JD2.423bn (US$3.42bn). In a statement issued in late January, it said that the number of overnight visitors had risen to 4.56m from 3.79m, with day visitor numbers up by 12% to 3.69m. Of the total, some 80% were from the Middle East or were Jordanians living abroad. The better 2010 figures came after a relatively poor 2009 that saw a 12% drop in revenue and a 2% decline in arrivals. Although Arab visitors dominate the numbers, the visitors to Jordan's historic sites tend to be mainly non-Arab foreigners. The tourism authorities will be watching to see if the political turmoil in the region, which has had a massive impact on the tourism sector in Tunisia and Egypt, and television footage of demonstrations in Jordan, will have an impact on visitor numbers in 2011.

Tourism was one of the best-performing sectors of the economy in 2010, and hotel development is emerging as an active area of construction, with two substantial projects announced for Amman. The UAE-based Arabian Construction Company has been awarded a US$93.7m contract by the Emirates Tourism Investment Company of Abu Dhabi to build the 425-room Rotana Hotel Tower as part of the Abdali Urban Regeneration project in central Amman. The tower will be the tallest building in Jordan at 188 metres and is due for completion in 2013. The second project will be the construction of the US$300m St Regis hotel in Amman, with work due to start in May 2011 and completion by 2014. Another Abu Dhabi firm, Al Maabar, is the main developer for the project, which will be managed by US-based Starwood Hotels and Resorts.

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Land area

89,206 sq km

Population

5.1m (2004 census)

Main towns

Population by governorate, ('000; end-2007 estimate)

Amman: 2,220 Jerash: 172

Irbid: 1,019 Madaba: 143

Zarqa: 853 Ajloun: 132

Balqa: 383 Aqaba: 120

Mafraq: 269 Maan: 109

Karak: 223 Tafileh: 80

Climate

Hot and dry summers, cool and wet winters

Weather in Amman (altitude 777 metres)

Hottest month, August, 14-37°C; coldest month, January, 0-16°C; driest months, May-August, 0 mm average rainfall; wettest month, February, 75.5 mm average rainfall

Language

Arabic; English is also widely spoken

Measures

Metric system and local measures

Currency

Jordanian dinar (JD) = 100 piastres = 1,000 fils. The dinar is pegged to the US dollar at JD0.709:US$1

Time

GMT plus two hours

Public holidays

New Year's Day (January 1st); Prophet Mohammed's birthday (February 15th 2011); Labour Day (April 29th); Independence Day (May 25th); Eid al-Fitr (August 30th 2011); Eid al-Adha (November 6th 2011); Islamic New Year (November 26th 2011); Christmas Day (December 25th)

The dates of Islamic holidays are based on the lunar calendar and are therefore approximate

Official name

Hashemite Kingdom of Jordan

Form of state

Constitutional monarchy

National legislature

Bicameral National Assembly: a directly elected Chamber of Deputies of 120 members and a Senate of 40 members appointed by the king. Under the constitution, senators are selected from among prominent political and public figures

Electoral system

Direct universal suffrage

National elections

Last election November 2010; next election is due in November 2014

Head of state

King Abdullah ibn Hussein al-Hashemi

National government

Council of Ministers headed by the prime minister, who is appointed by the king; ministers are appointed by the king, partly on the advice of the prime minister. The Council of Ministers is responsible to the Chamber of Deputies

Main political organisations

Active parties include the Jordanian National Alliance; the Popular Unity Party; the Future Party; the Unionist Arab Democratic Party; the Islamic Action Front; the Democratic Party of the Left; the National Constitutional Party; and the Baathist and Communist parties. The professional associations are also politically influential

Prime minister & defence minister: Marouf Bakhit

Deputy prime minister & interior minister: Saad Hayel Srour

Key ministers

Agriculture: Samir Habashneh

Awqaf & Islamic affairs: Abdel Rahim Akour

Culture: Tareq Masarweh

Education: Tayseer Nueimi

Energy & mineral resources: Khaled Toukan

Environment: Taher Shakhshir

Finance: Mohammad Abu Hammour

Foreign affairs: Nasser Judeh

Health: Yassin Husban

Information & communications technology: Atef Tal

Justice: Hussein Mjalli

Labour: Mahmoud Al Kafawin

Media affairs & communications: Taher Odwan

Municipal affairs: Hazem Qashou

Planning & international co-operation: Jafar Hassan

Public-sector development & political development: Mazen Saket

Social development: Salwa Damen

Tourism & antiquities: Haifa Abu Ghazaleh

Trade & industry: Hani Mulki

Transport: Mohannad Qudah

Water & irrigation: Mohammad Najjar

Head of the Royal Court

Nasser Lozi

Central Bank governor

Faris Sharaf