Superficial economic prosperity masked deep underlying structural problems; in the late 1980s, a number of intractable long-term economic problems and a host of short-term potential crises loomed. In the long range, if Jordan's domestic market could not grow sufficiently to permit the economies of scale necessary to sustain large manufacturing industries, capital investment and manufacturing value added would continue to be low; however, this difficutly might be offset if export markets were obtained. Gross barter terms of trade would decline further if the volume and value of manufactured imports rose faster than the volume and value of raw material exports. The merchandise trade deficit would continue because imports of certain commodities would continue to be necessary far into the future. The standard of living as measured by per capita GNP could eventually decrease as modest real economic growth was offset by a rapidly growing population. Domestic unemployment could increase to more than 9 percent as the young population matured and the domestic work force grew. Although a price increase for oil could restimulate the Jordanian economy by reopening Arabian Peninsula markets for goods and services, the resultant increased oil import bill would offset some of the gains. In the late 1980s, however, short-term financial problems including deflation, debt, and devaluation of the dinar (see Glossary), which lost 42.5 percent of its value between October 1988 and May 1989, commanded the government's attention more than did long-term problems.
Data as of December 1989