(MENAFN- Gulf Times) Despite a difficult regional context, Jordan's real GDP growth is expected to accelerate to 4% in 2015 and gather further momentum in 2016 (4.3%) and 2017 (4.5%) as economic reforms continue to bear fruit, QNB has said in a report.
Key contributors to growth are expected to be stronger construction activity and mining exports as well as higher government investment, QNB said in its 'Jordan economic insight 2015'.
Sustained lower energy prices are likely to increase competitiveness and domestic demand, it said.
According to QNB, Jordan's consumer price index (CPI) inflation was expected to slow to 0.8% in 2015 on the pass-through of lower oil prices, but would recover in 2016-17.
Lower global oil prices are expected to lead to negative foreign inflation in 2015, which will be counterbalanced by the continued presence of refugees in Jordan adding to domestic inflation.
Overall inflation will pick up in 2016-17 on a gradual pickup in foreign inflation due to the expected recovery in oil prices and stronger domestic demand.
Lower oil prices will narrow the current account deficit in 2015; the deficit will widen in 2016-17 once oil prices rebound.
"We expect a large reduction in the energy import bill, supported by the lower oil prices and the start of LNG imports, following the launch of the LNG terminal at the port of Aqaba starting in May 2015," QNB said.
A new bilateral agreement with India for Jordanian phosphate exports as well as a projected recovery in the price of potash was expected to lead to higher export growth, the report said.
Deposit growth is likely to slow in 2015 (5.2%) on lower inflation, but rebound in 2016 (6.9%) and 2017 (7.4%) on stronger economic growth and moderately higher inflation.
Lending growth is expected to rebound in 2015 (7.4%), 2016 (8.9%) and 2017 (9.5%) as lower government bond rates and reduced government financing needs push banks to increase their lending book
Profitability should rise on further declines in non-performing loans and continued high capitalisation ratios, QNB said.
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