Fitch Raises Jordan’s 2025 Growth Forecast Amid Strong Q1 Performance

AMMAN — Fitch Solutions has revised its 2025 real GDP growth forecast for Jordan upward from 1.6 per cent to 2.0 per cent, citing “stronger-than-expected” economic performance in the first quarter of the year.

Fitch’s forecast follows data from the Department of Statistics, showing a 2.7 per cent year-on-year expansion in Q1 2025, driven primarily by a rebound in the manufacturing sector.

According to the report, manufacturing, accounting for 17.7 per cent of GDP, grew by 5.1 per cent in real terms, marking its strongest quarterly performance since early 2008. 

On a seasonally adjusted basis, the economy grew 0.7 per cent quarter-on-quarter, maintaining the momentum observed since Q1 2024.

The report warned that the remainder of 2025 is expected to bring challenges. “Economic activity will slow from Q2 onwards as the impacts of US protectionism begin to weigh on domestic industries.”

US tariffs loom over H2

The downturn is expected to be driven by new US tariffs, set to take effect on August 1, under a trade policy announced by President Donald Trump. These tariffs, anticipated to range between 10 per cent and 20 per cent, will apply to goods exported from Jordan, potentially undermining the country’s key export sectors including textiles, jewelry, and fertilizers.

“Despite longstanding economic cooperation between the US and Jordan, there is little to suggest that the Kingdom has made progress on a revised trade agreement with the US. 

As such, our current view is that tariffs on goods exported by Jordan will increase to somewhere between 10-20 per cent on August 1.

 Given the importance of the US market to Jordan's economy, we still expect this to have a significant impact on Jordan's near-term growth outlook. Indeed, even with just the 10% baseline tariff applied, Jordan's trade deficit widened considerably JD1, 143.3 million in April, the widest recorded deficit.

With labour intensive sectors such as manufacturing (textiles, jewellery, and fertilisers) expected to experience a demand shock in H2, the report projects that unemployment will tick up from 21.3 per cent at end-2024 to 22.9 per cent by end-2025. “This will exert some downward pressure on consumer spending, offsetting the impact of low inflation, price growth came in at just 2.0 per cent y-o-y in May - and monetary easing on disposable incomes. Indeed, we expect inflation to average just 1.6 per cent in 2025, thanks to muted global energy prices.”

Fitch expects the Central Bank of Jordan to follow the US Federal Reserve in easing rates, projecting a 50-basis-point cut to 6.00 per cent by the end of 2025.

Brighter outlook for 2026

Looking ahead, Fitch projects that real GDP growth will accelerate to 2.8 per cent in 2026 as US tariffs fade and regional trade opportunities improve. A modest recovery in export volumes is expected, particularly as US buyers shift toward lower-tariff sources and regional markets such as Iraq and Syria reopen.

Improved investor confidence could drive an uptick in fixed capital formation, and slightly lower unemployment (to 22.3 per cent) combined with lower global energy prices could provide a boost to household consumption, according to the report.