It is clear; the largest economy in the world is in the ICU. The American government has been trying everything possible to revive the economy. Nevertheless, more banks have bankrupted and more jobs are lost every day.
Dubai as well, has been severely and negatively affected. Real estate prices have dropped at least by 40%, many companies laid off a considerable percentage of employees. As for other GCC countries, they are getting less cash due to the sharp drop in oil prices.
In US, Europe and Dubai, the situation is clear, the economy is going down and there are no signs – so far – for effectiveness of rescue plans.
However, in Jordan the situation is different; so far there are no clear signs of being Jordan affected by the crisis. Knowing that Jordan usually does not get affected by the first hit, but instead, by the consequences, it is logical to ask, how Jordan will be affected?
Personally, I believe there is no straight answer to this. The issue is multi-faceted. There are the ugly face and the good face, summarized as follows:
The ugly face
- Severely affected international companies will lay off employees. And some might shut down
- Less tourists from all over the world
- Fewer investments from the Gulf countries. With the dropping prices of oil, gulf countries are having fewer surpluses. Hence less investments flowing out of country, including to Jordan.
- Dubai has magnetized a lot of Jordanian talents over the last decade, but unfortunately, a decent number of Jordanians have been sacked, and most probably they will be returning back to Jordan, if they did not manage to get a job before summer. According to the daily news, I am not very optimistic about this – though I’ll keep my fingers crossed! This entails the following:
- More people competing on local job vacancies, which will adversely affect salaries.
- Instead of targeting Jordan for touristic and entertaining purposes, the situation this summer will be different. Their expenses will be very limited. As well-known, most tourism businesses in Jordan depend on summer income to cover the whole year expenses. So this will adversely affect those businesses.
- A Considerable cash flow, that used to come from remittances transferred from Jordanians working in Dubai every year, will drop as there will be less Jordanians earning money in Dubai.
The good face
- Jordan’s main asset is people. Fortunately, this is not affected by oil prices or banking issues! Good talents will be more creative in finding more ways to generate money and opening new markets.
- Dropping oil prices adversely affected prices, items prices are dropping and all for the benefit of Jordan people in terms of purchasing and consumption power.
- Sacked migrants will be returning with their savings! Since salaries in Jordan are not compared to Dubai salaries, most of them will be considering having their own investments and businesses rather than get employed. This means more ventures and more money injected in the market.
- Off shoring has flourished in Jordan over the last decade, mainly for the reason of cost-cutting. At the moment, the ultimate goal for most organizations over the world is to cut costs. Hence I expect to see more international companies opening offices in Jordan and especially for industries where off shoring proved to be a very good choice.
Still the situation is considered vague. Eventually, one face will dominate the scene, however, I believe this won’t materialize before the last quarter of the year 2009. Let’s wait and keep our figures crossed!