SKN | MF: Jordan’s Economy Grows at a Faster Pace

Jordan’s economy is showing renewed momentum, according to the International Monetary Fund, which points to steady growth, low inflation, and a resilient banking sector despite regional uncertainty. For investors, lenders, and policymakers, the IMF’s latest assessment highlights how sound banking and fiscal reforms can support stability even in an oil-importing economy.

A Resilient Economy Backed by Reforms

The IMF says Jordan’s economy grew by 2.7% in the first half of 2025 and is expected to reach around 3% growth in the coming years. This performance reflects years of fiscal discipline, structural reforms, and close cooperation with international partners. Inflation has remained anchored near 2%, helping preserve purchasing power for households and businesses, while prudent monetary policy has kept interest rate pressures contained.

For banks, this environment matters. Stable inflation and predictable interest rate trends support lending activity, from consumer credit to business loans. A healthier macro backdrop also strengthens confidence in deposits, checking accounts, and long-term savings products across Jordan’s financial system.

The Role of Banking Stability and Foreign Capital

A key pillar of Jordan’s resilience is its stable banking sector. The IMF notes that banks remain well capitalized, liquid, and supported by robust international reserves. This stability allows banks to continue extending credit to the private sector, supporting mortgages, small-business loans, and trade finance even amid regional tensions.

Foreign direct investment also plays a critical role. Saudi Arabia and other Gulf Cooperation Council countries account for more than a third of total FDI inflows, providing much-needed capital for infrastructure and development projects. These inflows strengthen bank balance sheets, increase deposit bases, and improve the capacity of lenders to fund long-term investment.

Ongoing Challenges for Growth and Inclusion

Despite the positive outlook, challenges remain. Youth unemployment is high, partly due to demographic pressures and refugee inflows from neighboring countries. Many skilled young Jordanians seek better-paid jobs abroad, limiting domestic productivity gains. From a banking perspective, this constrains demand for credit and slows the expansion of consumer banking services.

The IMF also highlights the need to foster stronger competition in the private sector. More competitive markets can stimulate entrepreneurship, boost demand for financing, and encourage innovation in digital banking and payments. Continued reforms are essential to ensure that credit flows efficiently to productive sectors of the economy.

Broader Implications and the Road Ahead

Jordan’s IMF-backed programs, including the Extended Fund Facility and the Resilience and Sustainability Facility, provide both funding and policy guidance. These frameworks help anchor investor confidence and support gradual reductions in public debt, which is targeted to fall toward 80% of GDP over time.

Closing Insights

Jordan’s experience shows how disciplined banking regulation and international support can underpin growth in challenging conditions. For investors, a stable financial system reduces risk and improves long-term prospects. For banks, the focus will be on channeling deposits into productive loans that create jobs and resilience. Sustained reform, paired with smart financial intermediation, will determine whether today’s momentum turns into durable prosperity.

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