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Recent Monetary & Economic Developments In Jordan

Central Bank of Jordan

Research Dept. Monthly Report August 2007

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Central Bank of Jordan Tel: (962 6) 4630301 Fax: (962 6) 4638889 / 4639730 P.O. Box 37 Amman 11118 Jordan Website http://www.cbj.gov.jo E-mail redp@cbj.gov.jo

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OUR VISION To be one of the most capable central banks regionally and internationally in maintaining monetary stability and ensuring the soundness of the financial system thereby contributing to sustained economic growth in the Kingdom.

OUR MISSION

Maintaining monetary stability in the Kingdom and ensuring the convertibility of the Jordanian Dinar and an interest rate structure consistent with the level of economic activity thereby contributing toward a sound macroeconomic environment. Furthermore, the Central Bank of Jordan strives to ensure the safety and soundness of the banking system and the resilience of the national payments system. To this end, the Central Bank of Jordan employs its human, technological, and financial resources in an optimal manner in order to effectively implement its objectives

OUR VALUES Loyalty : Commitment and dedication to the institution, its

staff and clients.

Integrity : Seeking to achieve our organizational goals

honestly and objectively.

Excellence : Seeking to continuously improve our performance and deliver our services in accordance with international standards.

Continuous Learning

: Aspiring to continuously improve practical and academic skills to maintain a level of excellence in accordance with international best practices.

Teamwork : Working together, on all levels of management, to achieve our national and organizational goals with a collective spirit of commitment.

Transparency : Dissemination of information and knowledge, and the simplification of procedures and regulations in a comprehensible and professional manner.

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5Executive Summary

7Monetary & Financial

Sector

First

19Output & Prices

Second

24Public Finance

Third

32External Sector

Fourth

Contents

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Executive Summary

The available data to date in 2007 displayed an

improvement in the performance of most economic indicators:

Output and Prices: Gross domestic product (GDP), at constant market prices, grew at 5.9 percent in the first quarter of 2007 compared to 6.7 percent during the same period in 2006. Inflation rate, measured by the percentage change in the consumer price index (CPI), stood at 5.9 percent in the first seven months of 2007 compared to 6.3 percent in the same period of the preceding year. In addition, the investments benefiting from the Investment Promotion Law soared by 107.6 percent, during the first seven months of 2007 compared to the same period in the previous year to total JD 1,675.0 million, of which 45.2 percent was foreign investments.

Monetary and Financial Sector: The Central Bank of Jordan (CBJ) foreign currency reserves

increased by US$ 421.8 million, or 6.9 percent, at the end of July 2007 compared with the end of 2006; standing at US$ 6,523.4 million.

Domestic liquidity grew by JD 946.3 million, or 6.7 percent, in the first seven months in 2007 compared to the end of 2006; totaling JD 15,056.0 million.

The outstanding balance of credit facilities extended by licensed banks increased by JD 1,186.9 million, or 12.2 percent, at the end of July 2007 compared with the end of 2006; totaling JD 10,948.8 million.

Total deposits at licensed banks rose by JD 963.3 million, or 6.6 percent, during the first seven months in 2007 compared with the end of the previous year to stand at JD 15,555.2 million.

The share price index at Amman Stock Exchange (ASE) stood at 5,684.2 points at the end of July 2007; an increase amounting to 166.1 points, or 3.0 percent, compared with the end of 2006.

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Public Finance: The general budget, including grants, showed a surplus in the amount of JD 88.4 million in the first half of 2007; compared with a surplus amounting to JD 72.6 million in the same period in 2006. Total outstanding domestic public debt increased by JD 61.0 million at the end of June 2007 compared to the end of 2006; standing at JD 3,022.0 million, or 26.6 percent of GDP. Furthermore, the outstanding external public debt fell by JD 81.5 million at the end of June 2007 compared with the end of the previous year, totaling JD 5,105.0 million, or 45.0 percent of GDP.

External Sector: The value of total merchandize exports (domestic exports + re-exports) grew at 19.1 percent during the first half of 2007 to reach JD 1,976.0 million. The value of imports, on the other hand, rose by 8.1 percent to total JD 4,358.7 million. In effect, trade deficit widened by 0.3 percent amounting to JD 2,382.7 million. Moreover, the preliminary figures for the first half in 2007 indicated a surge in the travel receipts by 20.7 percent and an increase in the total workers’ remittances receipts by 18.4 percent. In addition, the preliminary figures of the balance of payments showed that the current account deficit amounted to JD 369.9 million, or 14.7 percent of GDP, in the first quarter in 2007, compared with JD 581.1 million, or 26.1 percent of GDP, during the same quarter in 2006.

Dr. Umayya Toukan Governor, Chairman of the Board

Central Bank of Jordan

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First: Monetary and Financial Sector

Summary:

Foreign currency reserves at the Central Bank of Jordan (CBJ) rose by US$ 421.8 million, or 6.9 percent, at the end of July 2007 compared with the end of 2006 to stand at US$ 6,523.4 million. Further, these reserves recorded US$ 6,709.0 million on August 23, 2007; increasing by US$ 607.4 million, or 10.0 percent. This level of reserves is equivalent to approximately 7.0 months of the Kingdom’s imports of goods and services.

Domestic liquidity was up by JD 261.7 million, or 1.8 percent, in July 2007 compared with the previous month to total JD 15,056.0 million. Further, this liquidity was up by JD 946.3 million, or 6.7 percent, during the first seven months in 2007 compared with the end of 2006.

The outstanding balance of credit facilities extended by licensed banks rose by JD 1,186.9 million, or 12.2 percent, at the end of July 2007 compared with the end of 2006 to stand at JD 10,948.8 million.

Total deposits at licensed banks increased by JD 963.3 million, or 6.6 percent during the first seven months in 2007 compared with the end of 2006 to reach JD 15,555.2 million.

Interest rates on deposits and credit facilities at licensed banks displayed an upward trend in the first seven months of this year compared with the end of the previous year.

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Main Monetary Indicators JD Million, and Percentage Change Relative to the Previous Year (%)

End of July Year2007 2006 2006

US$ 6,523.4US$ 5,278.7CBJ’s Foreign Exchange Reserves US$ 6,101.66.9٪11.3٪28.6٪

15,056.0 13,230.5Money Supply (M2)14,109.7 6.7٪7.0٪14.1٪

10,948.8 9,314.1 Credit Facilities, of which:9,761.9 12.2٪20.3٪26.1٪

10,144.18,482.0 Private Sector (Resident)8,981.912.9٪19.5٪26.6٪

15,555.2 13,744.8 Total Deposits, of which: 14,591.9 6.6٪4.8٪11.2٪

10,245.88,750.4 in JD 9,427.18.7٪4.6٪12.7٪

5,309.44,994.4In Foreign Currencies 5,164.82.8٪ 5.0٪8.6٪

12,174.2 10,563.1 Deposits of Private Sector (Resident), of which:11,266.8 8.1٪8.5٪15.7٪

8,802.4 7,577.6 In JD 8,084.0 8.9٪8.0٪15.2٪

3,371.8 2,985.5 In Foreign Currencies 3,182.8 5.9٪9.9٪17.1٪

Source: Central Bank of Jordan / Monthly Statistical Bulletin.

The performance of Amman Stock Exchange (ASE) improved during the first seven months of 2007 compared with the end of the previous year; the share price index increased by 166.1 points, or 3.0 percent, compared to the end of 2006; standing at 5,684.2 points. Accordingly, the market capitalization increased by JD 1.0 billion, or 4.7 percent, totaling JD 22.1 billion at the end of July 2007.

CBJ Foreign Currency Reserves: The CBJ foreign currency reserves increased by US$ 251.8

million, or 4.0 percent in July 2007 compared with the previous month. Meanwhile, these reserves were up by US$ 421.8 million, or 6.9 percent during the first seven months in 2007 compared with

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the end of the preceding year. Moreover, the CBJ foreign currency reserves amounted to US$ 6,709.0 million on August 23, 2007; an increase of US$ 607.4 million, or 10.0 percent, in comparison with the end of 2006. It is worthy to indicate that this level of reserves is equivalent to approximately 7.0 months of the Kingdom’s imports of goods and services.

Domestic Liquidity (M2): Domestic liquidity totaled JD 15,056.0 million at the end of

July 2007; increasing by JD 261.7 million, or 1.8 percent, above its level at the end of the previous month, against a decrease in the amount of JD 30.0 million, or 0.2 percent, during the same month in the pervious year. Further, this liquidity grew by JD 946.3 million, or 6.7 percent, at the end of July 2007 compared with the end of 2006 against an increase in the amount of JD 866.5 million, or 7.0 percent, during the same period in 2006. In addition, the preliminary data reveals that the liquidity grew by 7.3 percent as of August 16, 2007 compared with the end of 2006.

The comparison between the developments in domestic liquidity components as well as the factors affecting the liquidity at the end of July 2007 and the end of 2006 indicates the following: Components of Domestic Liquidity: - Deposits rose by JD 875.8 million, or 7.2 percent, at the

end of July 2007 compared with the end of 2006; totaling JD 12,958.1 million, compared with an increase amounting to JD 587.0 million, or 5.5 percent, over the same period in 2006.

4.64.85.05.25.45.65.86.06.26.46.6

03 05 01/07 03/07 05/07 07/07

CBJ's Foreign Exchange Reserves (US $ Billion)

yearly 03-06 and Monthly Jan.07-Jul.07

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- Currency with the public increased by JD 70.5 million, or 3.5 percent, to stand at JD 2,097.9 million at the end of July 2007 in comparasion with the end of 2006, against an increase in the amount of JD 279.5 million, or 16.9 percent, during the same period in 2006.

Factors Affecting Domestic Liquidity:

- Net domestic assets of the banking system increased by JD 377.2 million, or 5.7 percent, at the end of July 2007 over its level at the end of 2006 against an increase amounting to JD 10.2 million, or 0.2 percent, during the same period in 2006. This increase was an outcome to the increase in net domestic assets at the licensed banks by JD 633.3 million, or 6.4 percent, and the decline in these assets at the CBJ by JD 256.1 million, or 7.9 percent. The drop of net domestic assets at the CBJ was due to the contractionary effect of “other” item which fell down by JD 340.2 million, or 10.1 percent.

Time and Saving Deposits63.2%

Currency In Circulation

13.9%

Demand Deposits22.9%

Relative Importance of Domestic Liquidity Components,Jul.07

-60.0

440.0

940.0

1440.0

1940.0

02 03 04 05 06 Jul.07Change In Net Domestic AssetsChange In Net Foreign AssetsChange In Domestic Liquidity

Factors Affecting Domestic Liquidityyearly 02- 06 and July 2007 , JD Million

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Changes In Factors Affecting Domestic Liquidity (M2) JD Million

Change in Balance relative to the previous year

July2007 2006 Year 2006 569.1 856.3 Foreign Assets (Net)1,408.6 339.8 435.6CBJ1,072.2 229.3 420.7Licensed Banks 336.4

377.210.2Domestic Assets (Net)337.1

-256.1 -144.2CBJ, of which: -659.4 84.3 -574.2 Claims on Public Sector (Net)-762.8

-340.2 430.1Other items (Net*)103.9 633.3 154.4Licensed Banks996.5 -57.8 268.9Claims on Public Sector (Net)413.8

1,202.8 1,366.2Claims on Private Sector (resident) 1,878.2 -511.7 -1,480.7 Other items (Net)-1,295.5

946.3 866.5Money Supply (M2)1,745.7 70.5 279.4Currency in Circulation 370.1 875.8 587.1Total Deposits, of which:1,375.6 192.0 236.0In Foreign Currencies 410.8

* This Item Includes Certificates of Deposit in Jordanian Dinar. Source: Central Bank of Jordan / Monthly Statistical Bulletin.

- Net foreign assets of the banking system increased by JD 569.1 million, or 7.6 percent, at the end of July 2007 compared with the end of the previous year compared with an increase in the amount of JD 856.3 million, or 14.2 percent, during the same period in 2006. This increase was a result of the increase of the net foreign assets at the CBJ by JD 339.8 million, or 6.2 percent and the increase in net foreign assets at the licensed banks by JD 229.3 million, or 11.5 percent.

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Interest Rates on Monetary Policy Instruments (%)

July Change Relative

to the Year of 2006 / Basis Point

2007 2006

Year Ended 2006

07.50 7.50 Re-discount Rate 7.50

-125 *7.258.50 Repurchase Agreements Rate (Repos)

8.50

0 5.255.25 Overnight Deposit Window Rate

5.25

-19 6.51 6.62 3-months CD’s Rate6.70

-24 6.627.04 6-months CD’s Rate 6.86

Source: Central Bank of Jordan / Monthly Statistical Bulletin. *: Represents overnight repurchase agreements since May 2,

2007.

Interest Rate Structure: Interest Rates on Monetary Policy Instruments:

• The CBJ kept the interest rates on its monetary instruments unchanged to date in 2007; staying at their levels at the end of 2006. However, the CBJ introduced an adjustment on the conditions of repurchase agreements allowing the licensed banks to execute repurchase agreements with the CBJ for overnight instead of one week, at an interest rate amounting to 7.25 percent; 125 basis points less than before. This adjustment became effective on May 2, 2007.

• The weighted interest rate on the latest three-month issue of certificates of deposit (CDs), which took place on August 26 2007, was 6.49 percent; a one basis point lower in comparasion with the level recorded in the previous issue on August 19, 2007. However, this rate was about 21.0 basis points lower than the end of 2006.

• The weighted interest rate on the latest six-month issue of CDs, which took place on August 26 , 2007, stood at 6.61 percent; a one basis point lower in comparasion with the level recorded in the previous issue on August 19, 2007 issue and around 25.0 basis points lower compared to the end of 2006.

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0.4

1.2

2.0

2.8

3.6

4.4

5.2

6.0

7/05 10/0501/06 04/0607/06 10/0601/07 04/0707/07

Time Deposits

Saving Deposits

Interest Rates on DepositsJul.05-Jul.07 Percentage Point

Interest Rates at Licensed Banks:

• Interest Rates on Deposits:

- Time Deposits: the weighted average of the interest rate on time deposits at the end of July 2007 stood at 5.54 percent; increasing by 5 basis points compared with the end of the previous month and 41 basis points in comparison with the end of 2006.

- Saving Deposits: the weighted average of the interest rate on saving deposits at the end of July 2007 fell down by 2 basis points compared to the end of the previous month; standing at 1.01 percent. However, this rate was up by 2 basis points compared with the end of the previous year.

- Demand Deposits: the weighted average of the interest rate on demand deposits at the end of July 2007 remained unchanged from its level at the end of the previous month standing at 0.96 percent. Nonetheless, the aforementioned rate was 9 basis points higher compared to the end of 2006.

• Interest Rates on Credit Facilities:

- Overdraft: the weighted average of the interest rate on overdraft accounts dropped by 48 basis points at the end of July 2007 compared with its level at the end of the previous month to stand at 9.52 percent. However, this rate was 29 basis points higher than its level at the end of 2006.

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Weighted Average Interest Rates on Deposits and Credit Facilities At Licensed Banks (%)

July Change Relative

to the Year of 2006 / Basis Point

2007 2006

Year Ended 2006

Deposits 9 0.96 0.81 Demand 0.87 21.01 1.08Saving 0.99

41 5.54 4.71Time 5.13

Credit Facilities

40 9.12 8.54 Discounted Bills and Bonds

8.72

15 8.71 8.22Loans and Advances 8.56

29 9.528.74Overdraft9.23

66 8.16 6.75Prime Lending Rate

7.50

Source: Central Bank of Jordan / Monthly Statistical Bulletin.

7.07.47.88.28.69.09.49.8

10.210.611.011.4

7/05 10/05 01/06 04/06 07/06 10/06 01/07 04/07 07/07

Loans and Advances

Overdraf t

Interest Rates on Credit FacilitiesJul.05-Jul.07 Percentage Point

- Discounted Bills and

Bonds: the weighted

average of the interest rate

on “discounted bills and

bonds” stood at 9.12 percent

at the end of July 2007;

down by 4 basis points

compared to the end of June

2007. Nonetheless, the

aforementioned rate was 40 basis points higher compared to the

end of 2006.

- Loans and Advances:

the weighted average of

the interest rate on

“loans and advances”

stood at 8.71 percent at

the end of July 2007;

down by 15 basis points

compared to the end of

June 2007. Nonetheless,

the aforementioned rate

was 15 basis points

higher compared to the

end of 2006.

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- The prime lending rate stood at 8.16 percent at the end of July 2007; increasing by 66 basis points over its level at the end of 2006.

Credit Facilities Extended by the Licensed Banks:

The outstanding balance of credit facilities extended by the licensed banks totaled JD 10,948.8 million at the end of July 2007; showing an increase of JD 189.2 million, or 1.8 percent, compared with the end of the previous month, compared with an increase in the amount of JD 63.8 million, or 0.7 percent, during the same month in 2006. Further, these facilities were up by JD 1,186.9 million, or 12.2 percent, during the first seven months in 2007 compared with the end of 2006, against a notable increase amounting to JD 1,569.8 million, or 20.3 percent, during the same period in the previous year.

The classification of extended credit facilities according to economic activity during the first seven months in 2007 demonstrates that the volume of the facilities extended to all sectors has increased, with the exception of those extended to the “agricultural sector” which dropped by JD 4.8 million, or 3.4 percent. Further, it is noted that the outstanding credit facilities extended to the activities classified as “other” fell by JD 69.3 million, or 1.9 percent, compared to the end of 2006 as a result of adjusting the classification of some credit facilities within this item.

In light of the above developments, the increase in the extended credit facilities in the first seven months of 2007 was mainly concentrated in the sectors of “general trade” and “construction” whose facilities increased by JD 528.2 million and JD 330.5 million, respectively. Consequently, the increase in the facilities extended to these sectors accounted for 44.6 percent and 27.8 percent, respectively, of the increase in the volume of credit facilities.

The categorization of credit facilities according to the borrower shows that the outstanding balance of credit facilities extended to the private sector (resident) increased by JD 1,162.2 million, or 12.2 percent, at the end of the first seven months in 2007

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compared with the end of the previous year to reach JD 10,144.1 million. Furthermore, the credit facilities extended to the public sector (central government + public institutions) were down by JD 13.1 million, or 2.8 percent, while the outstanding balance of credit facilities extended to the private sector (non-resident) was up by JD 28.1 million, or 8.9 percent, compared with the end of the previous year.

Deposits at Licensed Banks: Total deposits at the licensed banks stood at JD 15,555.2 million at the end of July 2007; up by JD 220.0 million, or 1.4 percent, compared with the end of the preceding month, against a decrease amounting to JD 37.8 million, or 0.3 percent, during the same month in 2006. Further, total deposits at the licensed banks increased by JD 963.3 million, or 6.6 percent, during the first seven months in 2007 over its level at the end of 2006 compared with an increase in the amount of JD 625.5 million, or 4.8 percent, during the same period in 2006.

The aforementioned increase in total deposits at the licensed banks, during the first seven months of 2007, was a result of the increase in the deposits of the private sector (resident) by JD 907.4 million, or 8.1 percent; the increase in the deposits of the public sector by JD 12.9 million, or 1.1 percent; the increase in the deposits of the private sector (non-resident) by JD 39.6 million, or 1.9 percent and the increase in the deposits of the non-banking financial institutions by JD 3.2 million, or 3.4 percent, in comparison with their levels at the end of the previous year.

The developments in the currency structure of deposits at the end of the first seven months of 2007 reveal that the “JD deposits” and the “deposits in foreign currencies” were up by JD 818.7 million, or 8.7 percent, and JD 144.6 million, or 2.8 percent, respectively, in comparison with their levels at the end of the previous year.

Amman Stock Exchange: The indicators of Amman Stock Exchange (ASE) displayed a

variant performance in July 2007. This can be summarized as follows:

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Share Price Index According to Sectors

July 20072006

End of 2006

5,684.2 5,930.3 General Index 5,518.1

10,551.211,691.8 Banks 10,704.7

2,902.3 2,424.8 Manufacturing & Mining

2,507.6

4,505.9 5,170.9 Insurance 4,156.3 2,417.0 2,536.6 Services 2,286.6

Source: Amman Stock Exchange.

• Trading Volume: The volume of trade at the ASE stood at JD 1,211.8 million

at the end of July 2007; up by JD 197.4 million, or 19.5 percent, compared with the end of June 2007, against a drop in the amount of JD 119.4 million, or 11.7 percent, during the same month in 2006. However, the trading volume in the first seven months in 2007 stood at JD 7,352.7 million; a drop of JD 1,533.5 million, or 17.3 percent, compared with the same period in 2006.

• Traded Shares: The number of traded shares in July 2007 totaled 430.9

million; down by 4.9 million shares, or 1.1 percent, compared with the end of June 2007. However, the number of traded shares in the first seven months of 2007 stood at 2,516.5 million shares compared with 2,226.5 million shares were traded during the same period in 2006.

• Share Price Index: The share price index (SPI) of the ASE dropped by 77.4

points, or 1.3 percent, in July 2007 compared with its level at the end of the previous month to stand at 5,684.2 points, compared with a drop amounting to 124.7 points, or 2.1 percent, during the same month in the previous year. However, the SPI gained 166.1 points, or 3.0 percent, in the first seven months of 2007 compared with the end of the preceding year. This increase was a direct result of the increase in the SPI for all sectors with the exception of the banking sector which decreased by 153.5 points or 1.4 percent. The SPI for insurance sector, industrial sector and service sector were up by 349.6 points, or 8.4 percent, 394.7 points, or 15.7 percent, and 130.4 points, or 5.7 percent, respectively.

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Main Amman Stock Exchange Trading Indicators

JD Million July Year

2007 20062006

1,211.8 903.2 Value Traded 14,209.9

55.1 41.1 Average Daily Trading 58.7

22,109.8 22,230.8 Market Capitalization 21,078.2

430.9 310.5 No. of Traded Shares (million) 4,104.3

25.6 2.5 Net Investment of Non-Jordanian 180.6

505.9 162.7 Non-Jordanian Buying 1,995.1

480.3 160.1Non-Jordanian Selling 1,814.5

Source: Amman Stock Exchange.

5450

5700

5950

6200

6450

6700

6950

7200

7/06 10/06 1/07 4/07 7/0721.0

21.8

22.5

23.3

24.0

24.8M arket C apitalizat io n

General P rice Index

T he General Share P rice Index (P o int) and T he M arket C apita lizat io n(JD B illio n)

Jul.06-Jul.07JD po int

• Market Capitalization: The market

capitalization of the ASE totaled JD 22.1 billion at the end of July 2007; down by around JD 0.3 billion, or 1.3 percent, in comparison with the previous month. However, the market capitalization in the first seven months of 2007 was up approximately by JD 1.0 billion, or 4.7 percent, compared with its level at the end of 2006, against a decline amounting to about JD 4.5 billion, or 16.9 percent, during the same period in 2006.

• Non-Jordanian Net Investment: Non-Jordanian net investment at the ASE registered a positive

inflow amounting to JD 25.6 million during July 2007 compared with JD 2.5 million during the same month in 2006. The value of shares purchased by non-Jordanians during July 2007 stood at JD 505.9 million, while the value of shares sold amounted to JD 480.3 million. Further, the non-Jordanian net investment in the first seven months of 2007 recorded a positive inflow amounting to JD 305.9 million compared with JD 151.5 million during the same period in 2006.

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The Quarter Growth Rate of GDP at Market prices 2005-2007

Percentages

YearQ4Q3Q2Q 1

2005

7.2 6.6 7.1 7.5 7.8 GDP at Constant Market Prices

11.5 11.1 11.4 11.4 12.2 GDP at Current Market Prices

2006

6.4 6.9 6.0 6.2 6.7 GDP at Constant Market Prices

12.2 12.9 12.3 12.1 11.2 GDP at Current Market Prices

2007

5.9 GDP at Constant Market Prices

12.9 GDP at Current Market Prices Source: Department of Statistics.

Second: Output and Prices Summary

Gross domestic product (GDP) grew, at constant market prices, by 5.9 percent in the first quarter of 2007 in comparison with 6.7 percent in the same period in 2006. At current market prices, the GDP grew by 12.9 percent compared to 11.2 percent in the first quarter in 2006.

The performance of the most available microeconomic indicators to date in 2007 displayed divergent trends.

The investments benefiting from the Investment Promotion Law recorded a notable increase by JD 868.0 million, or 107.6 percent, during the first seven months in 2007 compared to the same period in the previous year to stand at JD 1,675.0 million.

The consumer price index (CPI) was up by 5.9 percent during the first seven months in 2007 compared to 6.3 percent during the same period in 2006.

The Developments of Gross Domestic Product (GDP)

Gross domestic product (GDP) grew at 5.1 percent, at constant basic prices, in the first quarter in 2007 compared to 7.1 percent in the same quarter in 2006. When the item of "net taxes on product", which was up by 11.8 percent in the first quarter in 2007 compared to 3.4

20

123456789

1011121314

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

current constant

2 0 0 5 2 0 0 6

The Qua rte r Gro wth R a te o f GD P a t M a rke t P ric e s (2 0 0 5 -2 0 0 7 )

2 0 0 7

%

percent in the same period in 2006, was taken into account, the growth of GDP, at constant market prices, stood at 5.9 percent in the first quarter in 2007 compared to 6.7 percent in the same quarter in 2006.

Due to the growth of GDP deflator by 6.7 percent during the first quarter in 2007 compared to 4.3 percent in the same period in 2006, the GDP grew, at current market prices, by 12.9 percent compared to 11.2 percent in the first quarter in 2006.

The overall economic growth, at constant prices, during the first quarter in 2007 was an outcome to the growth of most economic sectors at rates ranging between 14.8 percent for the “finance and insurance” sector and 0.3 percent for the agriculture sector, on the one hand, and the contracting value added of “mining and quarrying” sector by 2.0 percent, on the other.

The economic growth in the first quarter in 2007 was mainly driven by the sectors of “finance, insurance and real estate”, “transport and communications”, “trade, restaurants and hotels”, and “producers of government services”, which accounted, collectively, for 4.0 percentage points, or 78.4 percent of overall economic growth at constant basic prices.

Microeconomic Indicators

The available microeconomic indicators to date in 2007 displayed divergent trends; some indicators, such as potash production, electricity production quantity index, and the number of arrivals to the Kingdom grew at fast pace; some other indicators, including the industrial production quantity index and cement sales to domestic market displayed a slowdown, while the performance of few indicators, such as the cargo through the Royal Jordanian and the production quantity indices of "mining and quarrying" and manufacturing followed a downward trend.

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Fast pace growing indicators * Percentages

January- June

20072006

Item 2006

22.9 12.0 Electricity production quantity index

16.9

1.0 -0.1 Licensed area for building5.7

11.2 7.6 Number of arrivals to the Kingdom

6.7

January- July

2007 2006

10.4 -7.5Production of potash -7.1

0.2-3.5Production of cement -1.9

Decelerating indicators * Percentages

January- June2006

20072006

Item

0.7 9.7 Industrial production quantity index

5.9

0.2 8.6 Quantity of cement sales to the domestic market

6.1

12.8 13.3 The number of passengers through the Royal Jordanian

13.2

Contracting indicators *

Percentages

January-June

20072006Item2006

-0.9 11.3 Manufacturing production quantity index

6.5

-0.2 -7.6 "Mining and Quarrying " production quantity index

-8.3

-8.1 -11.4 Cargo through the Royal Jordanian -2.8

January- July

2007 2006

-4.3 14.8 Production of fertilizers 9.0

-12.36.7Production of chemical acids 3.4

-6.0-5.1Production of phosphate-7.9

-13.82.1Production of petroleum products -4.7

-9.1 -6.2

Quantities of exported and imorted goods through the Aqaba Port

-16.0

* Calculated Items, Based on Data Issued by the Following Sources:

- Monthly Statistical Bulletin / Central Bank of Jordan.

- Jordan Cement Factories Company.

- Royal Jordanian.

The following tables display the performance of the main indicators to date in 2007 compared to the same period in 2006 and the whole 2006:

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Investments Benefiting from the Investment Promotion Law

The investments benefiting from the Investment Promotion Law (IPL) registered a remarkable increase during the first seven months in 2007 compared to the same period in 2006; surging by JD 868.0 million to stand at JD 1,675.0 million compared to JD 807.0 million during the same period in 2006. However, the number of investment projects benefiting from the aforementioned law was down from 428 projects during the first seven months in 2006 to 301 projects over the same period in this year. Further, foreign investments accounted for 45.2 percent, or JD 757.5 million, of the total investments benefiting from the IPL in the period under consideration compared to 21.9 percent, or JD 177.0 million, during the same period in 2006. The accelerated increase in foreign investments comes as a testimony to the high confidence of foreign investors in the Jordanian business environment.

The sectoral distribution of the investments benefiting from the IPL reveals that the industrial sector had the lion’s share; accounting for 89.0 percent, or JD 1,489.0 million, most of which were concentrated in cement and equipment industries, which accounted for JD 584.0 million and JD 213.0 million, respectively, in addition to pharmaceuticals and food industries such as dairy products, juices and magnetic cards, as well as electricity generation. Hotel sector came second with 9.0 percent of these investments, followed by hospitals (1.0 percent), and “expositions and conferences centers”, and agricultural projects which accounted for 0.5 percent for each one.

Prices

The general price level during the first seven months in 2007 increased at a slower pace than its level registered during the same period of 2006. The inflation rate, measured by the percentage change in the consumer price index (CPI), stood at 5.9 percent during the first seven months in 2007; down from 6.3 percent during the same period in the previous year.

23

Annual Inflation RateJanuary-July 1997-2007, percentages

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

1997 1999 2001 2003 2005 2007

The above-mentioned increase in the general price level was mainly influenced by the rise in the prices of 92.1 percent of the goods and services included in the CPI basket particularly “food items” group; the prices of vegetables surged by 36.3 percent due to a crop failure influenced by some unfavorable weather conditions, on the one hand, and the increase in the exports of these items by 23.4 percent, on the other; the prices of “meat and poultry” increased by 15.6 percent owing to the rise in demand for poultry to reach its normal level after the sharp decline in this demand during the same period in 2006 as a result of the avian flue, which emerged in the Kingdom in early 2006, on the one hand, and the shortage in the supply of poultry during the first half in this year as a result of the unfavorable weather conditions coupled with the increase in the prices of fodders, on the other.

In addition, the prices of "dairy products and eggs", fruits, "cereals and its products", "oils and fats" "sugar and confectionaries" increased by 9.6 percent, 8.4 percent, 6.4 percent, 6.3 percent and 3.1 percent, respectively. The non-food items whose prices were up included personal care, “fuels and electricity”, “clothing and footwear” as well as transportation; the prices of these items increased by 7.4 percent, 6.6 percent, 5.2 percent and 4.6 percent, respectively.

In contrast to the above, the price indices of the other items included in the basket of the CPI, which account for 7.9 percent of the basket, have declined; cardinally among these items was communications whose price dropped by 0.8 percent owing to the acute competition amongst the telecommunications companies, particularly in the area of cell phone services.

24

Third: Public Finance Summary:

The general budget showed a surplus (including grants) amounting to JD 88.4 million in the first half of 2007 compared with a surplus of JD 72.6 million during the same period in 2006. The budget surplus (excluding grants) amounted to JD 10.8 million.

The outstanding gross domestic public debt totaled JD 3,022.0 million, or 26.6 percent of GDP, at the end of June 2007; an increase of JD 61.0 million compared to the end of 2006.

Net outstanding domestic public debt stood at JD 2,305.0 million, or 20.3 percent of GDP, at the end of June 2007; up by JD 142.0 million compared to the end of 2006.

The outstanding external public debt at the end of June 2007 fell by JD 81.5 million in comparison with the end of 2006 to stand at JD 5,105.0 million, or 45.0 percent of GDP.

The performance of the general budget during the first half of 2007 compared with the same period in 2006:

Public Revenues Public revenues were down by JD 12.1 million, or 4.7

percent, in June 2007 compared with the same month in 2006 to total JD 244.3 million. However, Public revenues were up by JD 148.6 million, or 8.3 percent; during the first half of 2007 compared with the same period in 2006; totaling JD 1,934.9 million. This increase was influenced by the rise in domestic revenues by JD 181.1 million, on the one hand, and the drop of foreign grants by JD 32.5 million, on the other.

25

Main Government Budget Indicators in June and during the first half of 2007 and 2006

(in JD Million and Percentages) Jan. - June June Growth

Rate 20072006 Growth

Rate 2007 2006

8.3 1,934.9 1,786.3 -4.7244.3 256.4Total Revenues and Grants

10.8 1,857.3 1,676.2 3.4 244.3236.3Domestic Revenues

14.8 1,309.5 1,141.1 -6.1160.7171.1 Tax Revenues, of which:

16.5 666.3 572.0 -10.7100.0112.0 General Sales Tax

2.8 530.1 515.5 29.982.563.5 Non- tax Revenues, of which:

11.3 274.8 247.0 9.946.742.5 Fees

7.7 1,846.5 1,713.7 7.1 364.7340.6 Total Expenditures

88.4 72.6 -120.4-84.2 Overall Deficit/ Surplus (on a commitment basis)

Source: Ministry of Finance/ General Government Finance Bulletin.

02 0 04 0 06 0 08 0 0

10 0 012 0 014 0 016 0 018 0 02 0 0 02 2 0 0

2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 J a n-J un

2 0 0 7

General Sales Tax T ax on F o reig n T rade

T ax o n Inco me Ot her

Tax Revenue Structure 2001 - Jun 2007 , JD Million

Domestic Revenues Domestic revenues rose by JD 181.1 million; or 10.8

percent to reach JD 1,857.3 million. In effect, the ratio of these revenues to current expenditure exceeded 119.0 percent, which reflects an improvement in the reliance on own budget resources. Further, the relative importance of domestic revenues in public revenues stood at 96.0 percent during the first half of 2007 compared with 93.8 percent during the same period in 2006.

Tax Revenues

Tax revenues increased by JD 168.4 million, or 14.8 percent, to reach JD 1,309.5 million; accounting for 70.5 percent of domestic revenues. This performance was attributed to the following developments:

26

- The noticeable rise in taxes on income and profit by JD 64.4 million, or 19.9 percent, to reach JD 388.6 million. This rise was attributed to the improvement in the level of economic activities coupled with the enhancement in the efficiency of tax collection.

- The rise of the General Sales Tax (GST) revenues by JD 94.3 million, or 16.5 percent, to reach JD 666.3 million. This growth was influenced by the expansion in total demand for domestic and imported goods and services as a result of the improvement in the level of economic activity.

- The proceeds of foreign trade taxes stood at JD 156.8 million; registering an increase of JD 2.6 million, or 1.7 percent. This increase was attributed to the growth in merchandize imports by 8.1 percent in the first half of 2007 compared with 14.8 percent during the same period in 2006.

Non-Tax Revenues

Non-tax revenues increased by JD 14.6 million, or 2.8 percent, to reach JD 530.1 million. This increase was an outcome to the increase in the proceeds of "interests and profits", fees and licenses by JD 44.9 million, JD 27.8 million and JD 6.1 million, respectively, on the one side, and the drop in “other non-tax revenues” item by JD 62.2 million, on the other.

Repayments

Repayments declined by JD 1.9 million or 9.7 percent; amounting to JD 17.7 million.

27

0400800

12001600200024002800320036004000

2001 2002 2003 2004 2005 2006 Jan-Jun2007Oil Subsidies

other Capital ExpendituresInterest PaymentsDefense and SecurityCompensation of employees and pension

Total Expenditures Structure 2001 -Jun 2007 , JD Million

Foreign grants Foreign grants fell by JD 32.5 million, or 29.5 percent to

stand at JD 77.6 million. Public expenditures

Public expenditures rose by JD 24.1 million, or 7.1 percent, in June 2007 compared with the same month in 2006 to stand at JD 364.7 million. Moreover, these expenditures increased by JD 132.8 million, or 7.7 percent, during the first half of 2007 to stand at JD 1,846.5 million compared with the same period in the previous year. This increase was the outcome of the rise in current expenditures by JD 147.1 million, on the one hand, and the decrease in capital expenditures by JD 14.3 million, on the other.

Current Expenditures Current expenditures were up by JD 147.1 million, or 10.4 percent; amounting to JD 1,557.1 million. This development was mainly influenced by the rise in “defense and security” expenditures by JD 192.2 million, or 50.9 percent; the increase in the “other current expenditures” item by JD 43.8 million and the increase in “employees’ compensations” item by JD 25.1 million to stand at JD 291.3 million, as a result of the natural annual growth in this item. Moreover, interest payments grew by JD 20.8 million to stand at JD 163.9 million as a result of the increase in both internal and external interest payments by JD 16.1 million and JD 4.7 million, respectively. In contrast, it is noted that the item of “oil subsidies” has disappeared from the current expenditures during the first half of 2007 (which reached JD 129.3 million during the same period in 2006).

28

Capital Expenditures

Capital expenditures dropped by JD 14.3 million, or 4.7 percent, to stand at JD 289.4 million. Consequently, the relative importance of these expenditures in public expenditures dropped from 17.7 percent during the first half in 2006 to 15.7 percent during the same period in 2007. It is worth mentioning that the achievement ratio in these expenditures (the ratio of actual capital expenditures during the first half of 2007 to the estimated capital expenditures for the whole 2007) registered 30.6 percent only, owing to the decline in the volume of foreign grants which did not exceed 14.0 percent of the targeted level in the budget.

Fiscal Deficit/Surplus

The general budget, showed a deficit, on a commitment basis, amounting to JD 120.4 million in June 2007 compared with a deficit in the amount of JD 84.2 million in the same month in 2006. As for the first half of 2007, the general budget showed a surplus, on a commitment basis, amounting to JD 88.4 million compared to a surplus of JD 72.6 million during the same period in 2006. It is worth noting that the delay of issuing the budget law for 2007 and the existent of financial commitments under settlement during the first half in 2007, have contributed to the overall budget surplus including grants. Therefore, the budget deficit, including grants, is expected to reach JD 476.7 million during the second half in 2007, depending on the estimation of the General Budget Law and its supplement for 2007.

29

0

20

40

60

80

100

120

2001

2002

2003

2004

2005

2006

Jan

Feb

Mar

Apr

May

Jun

2007

Public Debt As a Percentage of GDP

Net Public Debt

External Public Debt

Domestic Public Debt

0

1000

2000

3000

4000

5000

6000

7000

8000

2001

2002

2003

2004

2005

2006 Jan

Feb

Mar

Apr

May

Jun

Public Debt 2001 - Jun 2007 , JD Million

Net Public Debt

Domestic Public Debt

External Public Debt

2007

When rescheduled interest (which amounted to JD 22.8 million) is excluded from public expenditures, the budget surplus, on a cash basis, during the first half in 2007 stands at JD 111.2 million; up from a surplus of JD 97.9 million during the same period in 2006.

. Public debt

Total outstanding domestic public debt of the central government was up by JD 61 million to reach JD 3,022.0 million, or 26.6 percent of GDP, at the end of June 2007 compared to the end of 2006. This development was mainly attributed to the increase in the outstanding balance of the “treasury bills and bonds” by JD 50.0 million to stand at JD 2,550.0 million. It is worth indicating that the treasury bills and bonds accounted for 89.0 percent of the total

30

outstanding domestic public debt. This comes in conformity with the Public Debt Management Law for 2001 which confines the government’s borrowing to the treasury bills and bonds instead of direct borrowing.

Net outstanding domestic public debt (gross outstanding domestic public debt minus central government deposits at the banking system) increased by JD 142.0 million at the end of June 2007 compared with the end of 2006 to total JD 2,305.0 million, or 20.3 percent of GDP. The aforementioned increase was an outcome of the increase in the outstanding domestic public debt by JD 61.0 million and the drop of the deposits of central government and own-budget agencies at the banking system by JD 81.0 million compared with the end of 2006.

Outstanding external public debt (budget and guaranteed) fell by JD 81.5 million at the end of June 2007 compared to the end of 2006; amounting to JD 5,105.0 million, or 45.0 percent of GDP. This development was mainly due to the appreciation in the currencies of the main debtor countries against the US dollar, and thus against the Jordanian dinar, which resulted in increasing the external debt by JD 10.2 million, on the one hand, and the decline in the net borrowing by JD 91.7 million, on the other. The distribution of external denominated loans according to currency indicates that the loans denominated in the US dollar accounted for 30.4 percent of the outstanding external public debt, while the loans denominated in Euro and Japanese yen accounted for 22.3 percent and 17.2 percent of the outstanding external public debt, respectively.

31

Net public debt (domestic and external) displayed an increase by JD 60.5 million at the end of June 2007 compared with the end of 2006 to stand at JD 7,410.0 million, or 65.3 percent of GDP, compared to JD 7,349.5 million, or 72.7 percent of GDP, at the end of 2006.

External debt service (on a cash basis) amounted to JD 231.1 million in the first half of 2007 (of which interest payments amounting to JD 74.8 million), compared with JD 210.6 million during the same period in 2006 (of which interest payments amounting to JD 70.3 million).

When rescheduled principals and interests, which totaled JD 67.9 million in the first half of 2007, are taken into account, external debt service (on a commitment basis) rises to JD 299.0 million (of which interest payments in the amount of JD 97.5 million) compared with JD 283.1 million (of which interest payments in the amount of JD 95.6 million) during the same period in 2006.

Fiscal Measures

The cabinet decided to exempt retailers with volume of sales’ ranging between JD 50.0 thousand and JD 100.0 thousand from the general sales tax (August 2007).

The cabinet decided to extend export subsidy program which exempts export profits from income tax until the end of 2015 following the approval of the World Trade Organization (WTO) (July 2007).

Grants and Loans

A grant from the Japanese government in the amount of US$ 5.5 million for financing the second phase of the development of water supply project for Zarqa governorate (July 2007).

32

Fourth: External Sector Summary:

The value of total merchandize exports (domestic exports plus re-exports) increased by 10.9 percent in June 2007. Further, total merchandize exports grew at 19.1 percent in the first half of 2007 compared with 12.6 percent during the same period in the preceding year.

The value of merchandize imports fell by 8.8 percent in June 2007. However, these imports grew at 8.1 percent in the first half of 2007 compared with 14.8 percent during the same period in 2006.

Trade balance deficit (total exports minus imports) was down by 22.9 percent in June 2007. However, this deficit grew in the first half of 2007 by 0.3 percent against 16.4 percent during the same period in the preceding year.

Travel receipts were up by 1.6 percent in June 2007 compared with an increase by 20.3 percent in the same month in the previous year. Moreover, these receipts grew at 20.7 percent during the first half of 2007 compared with 11.9 percent during the same period in 2006.

Total workers’ remittances receipts increased by 6.0 percent in June 2007 compared with 30.5 percent during the same month in 2006. Moreover, these remittances grew at 18.4 percent in the first half of 2007 compared with 12.0 percent over the same period in the previous year.

The current account of the balance of payments recorded a deficit amounting to JD 369.9 million, or 14.7 percent of GDP, in the first quarter in 2007 compared with JD 581.1 million, or 26.1 percent of GDP, during the same quarter in 2006.

33

Jordan's Major Trade Partners January–June 2006 & 2007, JD Million

2006 2007 Percentage Change

Exports

United States 406.6 406.8 0.05

Iraq 187.0 168.7 -9.8

Saudi Arabia 123.4 133.7 8.3

India 124.9 133.4 6.8

Syria 65.1 101.0 55.1

United Arab Emirates 91.4 60.6 -33.7

Algeria 28.1 40.7 44.8

Imports

Saudi Arabia 1,060.4 760.4 -28.3

China 378.7 452.1 19.4

Germany 343.3 371.9 8.3

Egypt 172.9 205.2 18.7

United States 184.8 200.0 8.2

Italy 137.4 152.9 11.3

Japan 126.2 145.3 15.1

South Korea 136.3 132.2 -3.0 Source: Department of Statistics

Monthly Developments of External Trade Indicators, JD Million

June

2006 Percentage

Change

2006/2005

2007 Percentage

Change

2007/2006

External

Trade 957.2 2.7 897.1 -6.3

Total

Exports 295.6 8.1 327.7 10.9

Domestic

Exports 248.2 10.1 250.5 0.9

Re-

exports 47.4 -1.5 77.2 62.9

Imports 709.0 0.3 646.6 -8.8

Trade

Balance -413.4 -4.7 -318.9 -22.9

Source: Department of Statistics

External Trade

In light of the increase in both domestic exports and imports by JD 174.6 million and JD 325.6 million, respectively, in the first half of 2007, the volume of external trade (domestic exports + imports) grew by JD 500.2 million to stand at JD 5,933.8 million, against JD 696.7 million increase over the same period in the previous year.

34

Merchandize Exports:

Total merchandize

exports grew at 19.1 percent

to reach JD 1,976.0 million in

the first half of 2007

compared with a growth

amounting to 12.6 percent

during the same period in the

previous year. This growth

was a result of the increase in domestic exports by 12.5 percent to

reach JD 1,575.1 million and the growth in re-exports which soared

by 55.3 percent to reach JD 400.9 million.

The comparison between the developments in domestic exports

during the first half in 2007 and the same period in year 2006

reveals the following:

• The exports of vegetables grew notably by JD 86.6 million to reach

JD 172.1 million. The geographical distribution indicated that the

markets of Syria, Iraq and United Arab Emirates accounted for 69.8

percent of these exports.

• The exports of “medical and pharmaceutical products” grew at

58.2 percent to reach JD 174.0 million. The Saudi, Algerian and

Sudanese markets possessed about 61.6 percent of these exports.

0 50 100 150 200 250 300 350 400

c lot hes

fruit s a nd ve ge t a ble s

me dic a l & pha rma ce ut ic a lproduc t s

pot a sh

fe rt iliz e rs

phospha t es

Major Exports by Commodity January-June 2007, JD Million

35

Major Domestic Exports by Commodity January–June 2006 & 2007, JD Million

2006 2007 Percentage change

Total Domestic Exports

1,400.5 1,575.1 12.5 Clothes 398.5 394.1 -1.1 United States 371.7 367.1 -1.2 Medical & Pharmaceutical Products

110.0 174.0 58.2

Saudi Arabia 38.9 47.1 21.1 Algeria 23.2 35.9 54.7 Sudan 8.4 24.1 186.9 Vegetables 85.5 172.1 101.3 Syria 28.0 64.7 131.1 Iraq 13.3 39.5 197.0 United Arab Emirates 12.3 16.0 30.1 Potash 70.5 106.2 50.6 India 20.1 29.3 45.8 Malaysia 14.8 14.2 -4.1 China 0.0 14.1 - Fertilizers 68.4 99.2 45.0 India 31.2 29.8 -4.5 Japan 0.0 17.8 - Ethiopia 0.0 17.0 - Machinery & Transport Equipment 64.0 81.4 27.2

Saudi Arabia 9.1 30.9 239.6 Iraq 13.0 9.2 -29.2 Syria 11.1 8.9 -19.8 Phosphates 57.0 71.9 26.1 India 39.4 50.5 28.2 Indonesia 0.0 5.4 -

Netherlands 3.9 4.8 23.1 Source: Department of Statistics

• The exports of potash displayed a marked growth; increasing by 50.6 percent to stand at JD 106.2 million. The Indian, Malaysian and Chinese markets possessed 54.2 percent of these exports.

• The exports of fertilizers grew at 45.0 percent to reach JD 99.2 million. The Indian, Japanese and Ethiopian markets accounted for 65.1 percent of these exports during the first half of 2007.

• The exports of “machinery and transport equipment” increased by 27.2 percent to stand at JD 81.4 million. The geographical distribution of the Jordanian exports reveals that the Saudi, Syrian and Iraqi markets possessed about 60.2 percent of these exports.

• The exports of phosphates were up by 26.1 percent to reach JD 71.9 million. The Indian market was the main destination of these exports; accounted for 70.2 percent.

36

• The exports of clothes displayed a slight decline amounting to 1.1 percent to total JD 394.1 million. Accordingly, the relative importance of clothing exports to domestic exports declined by 3.4 percentage points. The geographical distribution was such that the USA market had the lion’s share; possessed about 93.1 percent of clothing exports.

In light of the above-mentioned developments, the commodity

breakdown of domestic exports indicates that the exports of clothes,

“medical and pharmaceutical products”, vegetables, potash,

fertilizers, “machinery and transport equipment” and phosphates

were the main seven exported commodities during the first half of 2007;

possessed about 69.8 percent of domestic exports; up from 61.0 percent

during the same period in 2006.

The geographical distribution

of domestic exports indicates that

the markets of USA, Iraq, Saudi

Arabia, India, Syria and United

Arab Emirates were the main six

destinations of the Jordanian

domestic exports during the first

half of 2007; accounted for 63.8

percent of these exports; down

from 71.3 percent during the same period in the previous year.

Arab Countries

46.6%EuropeanCountries

3.9%

Other countries

13.9%India 8.5%

China 1.3%

United States of America25.8%

Geographic Distribution of Domestic Exports January -June 2007

37

Merchandize Imports:

Merchandize imports stood at JD 4,358.7 million after growing by JD 325.6 million, or 8.1 percent, in the first half of 2007 compared with a growth amounting to 14.8 percent during the same period in the year 2006.

The comparison between developments in the Jordanian imports during the first half in 2007 and the same period in 2006 reveals the following:

• The imports of “telecommunications equipment” were up by JD 76.3 million, or 40.6 percent, to reach JD 264.1 million. The markets of Finland, Hungary, Germany and China possessed 84.4 percent of these imports.

• The imports of “steel and iron” increased by JD 70.5 million, or

46.5 percent, to total JD 222.2 million. The market of Ukraine was the main source of these imports; possessed 45.9 percent.

• The imports of Petroleum Products were up by JD 10.7 million, or 6.3 percent; totaling JD 181.5 million. The markets of Yemen and Malaysia possessed about 33.7 percent of these imports.

0 100 200 300 400 500 600 700

Crude oil and petroleum products

Transport equipment and spareparts

Telecommunication equipment

Textile yarn

Iron and steel

Machinery Specialized forAgriculture,Industry&Construction

Sectors

Major Imports by Commodity January-June 2007, JD Million

38

Major Imports by CommodityJanuary–June 2006 & 2007, JD Million

2006 2007 Percentage

change

Total Imports 4,033.1 4,358.7 8.1

Crude Oil 719.5 490.2 -31.9

Saudi Arabia 719.5 485.9 -32.5

Transport Equipment and spare parts

409.6 381.2 -6.9

Germany 140.1 93.3 -33.4

Japan 67.8 82.0 20.9

South Korea 75.8 75.5 -0.4

Telecommunication Equipment 187.8 264.1 40.6

Finland 49.4 81.0 64.0

Hungary 29.1 55.3 90.0

Germany 44.1 54.6 23.8

China 28.8 31.9 10.8

Textile Yarn, Fabrics & Related Products

264.1 236.8 -10.3

China 119.0 110.9 -6.8

Taiwan 35.8 32.7 -8.7

Hong Kong 22.0 15.9 -27.7

Iron & Steel 151.7 222.2 46.5

Ukraine 61.8 101.9 64.9

Russia 28.7 36.6 27.5

Petroleum Products 170.8 181.5 6.3

Yemen 0.0 32.0 -

Malaysia 0.0 29.1 -

Machinery Specialized for Agriculture, Industry and Construction sectors

104.2 137.6 32.1

Germany 16.8 36.0 114.3

Netherlands 2.8 13.2 371.4

china 12.2 13.0 6.6

Italy 22.4 10.7 -52.2

Source: Department of Statistics

• The imports of “machinery specialized for agriculture, industry and construction sectors” increased by JD 33.4 million, or 32.1 percent; amounting to JD 137.6 million. The main sources for these imports were the markets of Germany, Netherlands, China and Italy which accounted collectively for 53.0 percent of these imports.

• The imports of crude oil dropped by JD 229.3 million, or 31.9 percent, to reach JD 490.2 million. This decline came out as a result of the drop in the international oil prices by 3.9 percent coupled with the decline in the imported quantities of crude oil by 29.1 percent. It is worthy to note that most the Jordanian imports of crude oil come from the Saudi Arabian market.

39

• The imports of “transport equipment and spare parts” were down by JD 28.4 million, or 6.9 percent, to reach JD 381.2 million. The markets of Germany, Japan and South Korea accounted for 65.8 percent of these imports.

• The imports of “textile yarn, fabrics, made up articles and related products” decreased by JD 27.3 million, or 10.3 percent; amounting to JD 236.8 million. The main source for these imports was the Chinese market followed by the markets of Taiwan and Hong Kong.

The commodity composition of imports indicates that crude oil, “transport equipment and spare parts”, telecommunications equipment, “textile yarn, fabrics, made up articles and related products”, “steel and iron” petroleum products as well as “machinery specialized for agriculture, industry and construction sectors” were the main seven imported materials; possessed 43.9 percent of total imports in the first half of 2007 compared with 49.8 percent during the same period in 2006.

The geographical distribution of imports indicates that the markets of Saudi Arabia, China, Germany, Egypt, USA, Italy, Japan and South Korea were the main eight sources of imports in the first half of 2007; accounting for 55.5 percent of total imports compared with 63.0 percent during the same period in the previous year.

Geographic Distribution of Imports January -June 2007

Other countries

24.6%

Arab Countries

30.7%

China10.4%

Japan 3.3%United

States of America

4.6%

European Countries26.4%

40

Re-Exports: The value of re-exported goods grew remarkably at 55.3

percent to reach JD 400.9 million in the first half of 2007, against a slight increase of 3.9 percent during the same period in 2006. Trade Balance:

Trade balance deficit widened by JD 8.2 million, or 0.3 percent, in the first half of 2007 compared with the same period in 2006 to stand at JD 2,382.7 million.

Workers’ Remittances Receipts: Total Workers’ remittances receipts were up by JD 179.8

million, or 18.4 percent, in the first half of 2007 compared with the same period in 2006 to stand at JD 1,156.5 million.

Travel Receipts: Travel receipts grew at 20.7 percent in the first half of 2007

against a growth of 11.9 percent during the same period in 2006 to reach JD 568.1 million.

Balance of Payments: The preliminary statistics of the balance of payments in the first

quarter in 2007 compared with the same quarter in 2006 indicate the following:

The current account deficit narrowed down from JD 581.1 million in the first quarter in 2006 to JD 369.9 million during the same period in 2007. This result was influenced by the following developments:

• The deficit of trade balance was down by JD 107.4 million to stand at JD 856.2 million.

• The services balance deficit narrowed down by JD 57.6 million to reach JD 42.1 million.

41

-1000-800-600-400-200

0200400600

2005 2006 2007Trade BalanceCurrent TransfersServices& Income AcoountCurrent Account

Current Account Componentsfirst quarter 2005-2007

• Net current transfers decreased by JD 22.7 million; totaling JD 367.4 million.

• The surplus of income balance (net) increased by JD 68.9 million; amounting to JD 161.0 million.

As for the financial and capital transactions with the rest of the world, the financial and capital account recorded net inflow amounting to JD 220.1 million in the first quarter of 2007 compared with JD 642.5 million during the same period in 2006 owing to the following:

• The decrease in net inflow of foreign direct investment from JD 893.7 million to JD 342.2 million.

• The decrease in net outflow of portfolio investment amounting to JD 40.6 million compared with net inflow in the amount of JD 105.2 million in the first quarter in the preceding year.

• The decrease in net inflow of “other investments” to JD 137.9 million in the first quarter of 2007 against net outflow amounting to JD 265.2 million during the same period in the preceding year.

• The increase in the reserve assets of the CBJ by JD 220.0 million in the first quarter of 2007 compared with JD 96.4 million in the first quarter of 2006.