Jordan’s central bank governor, Ziad Fariz, said on Monday it was too early to predict the extent of the negative impact on the cash-strapped economy from a nearly month-long lockdown to stem the coronavirus outbreak.
“The forecasts of growth are premature. It’s difficult to predict the extent of the negative impact on the growth rate,” Fariz told Jordan’s Al Mamlaka television news channel. He added, however, that the crisis had resulted in a sharp drop in demand and production and that the once-thriving tourism sector would require at a least a year to recover.
The International Monetary Fund (IMF), which last month approved a four-year $1.3 billion program with the kingdom, had expected Jordan’s economy to grow around 2.1% in 2020 but gradually rise in the next few years to 3.3%.
Officials are worried that the effect of the crisis on tourism, which generates around $5 billion annually, will slash growth projections and deepen an economic downturn and a slowdown in domestic consumption that was evident even before the outbreak.
“For nearly a month now the Jordanian economy has nearly stopped,” Fariz said.
The country has been quicker than most in the region to take drastic measures to stem the spread of the virus by imposing a tight lockdown that has brought large sectors of the economy to a standstill.
Jordan has stopped all international flights and closed all border crossings for passenger travel with Syria, Iraq, Israel and Saudi Arabia and imposed a curfew under draconian emergency laws.
Jordan has 349 cases and six deaths but the authorities fear the virus could spread quickly.
The central bank took a series of measures last month to mitigate the impact by reducing interest rates and cut compulsory reserves for commercial banks to inject more than 500 million dinars ($705 million) of extra liquidity.
It also prodded banks to extend another 500 million dinars at interest rates that do not exceed 2% to help firms that have been hurt by closures.
A main concern was keeping industry and small businesses from faltering, Fariz said, adding a resilient banking sector with over 30 billion dinars in deposits underpinned the country’s monetary stability.
The government said it was considering reopening some industries and small businesses that have been closed since the lockdown in an attempt to ease the impact on the economy.
Fariz said the kingdom which imports all its energy needs could benefit from a steep drop in oil prices as the coronavirus pandemic pummels demand.
“The reduction in oil prices reduces the burden on the economy.”