Jordan's Draft 2021 Budget Projects 2.5% Growth

Jordan's economy is expected to shrink by 3 percent this year. (AFP)
Jordan's economy is expected to shrink by 3 percent this year. (AFP)
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Jordan's Draft 2021 Budget Projects 2.5% Growth

Jordan's economy is expected to shrink by 3 percent this year. (AFP)
Jordan's economy is expected to shrink by 3 percent this year. (AFP)

Jordan's draft 2021 budget forecasts JOD9.9 billion (USD14 billion) in state expenditure and economic growth of 2.5 percent after the COVID-19 pandemic caused the worst contraction in decades, the finance minister said on Monday.

Mohamad Al Ississ told Reuters the cabinet had approved a budget that would accelerate IMF-backed reforms to help the kingdom restore fiscal prudence for a sustained recovery.

He said the budget would continue major fiscal reforms, including continuing an aggressive tax evasion campaign that has netted this year hundreds of millions of dinars for the country's strained state finances.

"Despite the unprecedented challenges, fiscal stability remains our priority," he said.

Ississ said the government would not resort to new taxes but a commitment to raise public sector pay that was postponed this year would push state spending, the bulk consumed by salaries and pensions.

Jordan's economy is expected to shrink by 3 percent this year, an improvement from an earlier 5.5 percent, the sharpest contraction in two decades. Before the pandemic struck, the IMF had estimated economic growth of 2 percent.

The government has given priority to cushioning the pandemic's impact on the poor by expanding a social safety net that has provided support to at least 2.5 million people, more than a third of the country's citizens, Ississ said.

It will help to ease the pain of the pandemic that has pushed unemployment to a record 23 percent, he added.

Although the kingdom has been more dependent than other regional economies on hard-hit sectors such as tourism and remittances, its commitment to an IMF-backed USD1.3 billion four-year program has helped to maintain external financing from major Western donors.

Jordan's commitment to IMF reforms and investor confidence in the country's improved outlook helped it to maintain stable sovereign ratings at a time when other emerging markets were being downgraded, the minister added.

Last week, Moody's affirmed Jordan's B1 credit rating, citing expenditure control and improved tax compliance. That followed a B+/B rating from Standard and Poor’s in September.



Tesla, Chips, and Banks Tumble as China’s Retaliation Stokes Fears of Widening Trade War

Tesla’s logo on a building of the Tesla Gigafactory in Gruenheide, near Berlin, Germany, 03 April 2025. (EPA)
Tesla’s logo on a building of the Tesla Gigafactory in Gruenheide, near Berlin, Germany, 03 April 2025. (EPA)
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Tesla, Chips, and Banks Tumble as China’s Retaliation Stokes Fears of Widening Trade War

Tesla’s logo on a building of the Tesla Gigafactory in Gruenheide, near Berlin, Germany, 03 April 2025. (EPA)
Tesla’s logo on a building of the Tesla Gigafactory in Gruenheide, near Berlin, Germany, 03 April 2025. (EPA)

US chip companies, banks and oil majors fell sharply on Friday after China retaliated to Trump's tariffs with steep duties, in an intensifying trade war between the world's two largest economies that cast a shadow on global growth.

China slapped additional duties of 34% on US goods, set to go into effect April 10. It also announced curbs on exports of some rare-earths and added several US firms to its export control list and the "unreliable entities" list, which allows Beijing to take punitive action.

The action followed US President Donald Trump's 34% duties on imports from China announced on Wednesday, which triggered a massive market meltdown on Thursday. The latest levies were on top of the 20% tariffs on China imposed earlier this year.

Investors were already fretting over potential supply chain disruptions, price hikes and demand destruction for everything from cars and smartphones to sneakers.

Shares of Tesla and Apple - among consumer tech companies with a large exposure to China - were down 8% and 4%, respectively. While both companies have local production in China, duties on US-imported parts could squeeze margins and force price hikes.

"Several tech companies have established local supply chains in China. Most source components from China already, and hence, disruptions should be controllable, though we do expect price hikes on parts and components not being sourced from China," said Nishant Udupa, practice director at research firm Everest Group.

For Tesla, already in a bruising price war with local Chinese rivals, raising prices would pressure demand further.

"Apple's smartphone sales had already been declining in China for some time, faced with growing, cheaper competition. So, the prospect of steep import duties being imposed is likely to sharply erode sales even further," said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

Shares of Alphabet, Microsoft and Amazon.com were subdued as they had limited exposure to China.

GE Healthcare's stock slid nearly 13%, following China's export controls on a rare-earth metal that is used in MRI scans. The country's announcement of an anti-dumping investigation into imports of certain medical CT tubes from the US and India added to the worries.

SEMICONDUCTORS

Chip companies are set to face headwinds, too, although US exports a much smaller amount of electronic equipment to China. Shares of Intel, Applied Materials and Qualcomm, all of which count on China for at least 30% of revenue, were down 5% to 8%.

The US exported more than $15 billion worth of electrical and electronic equipment to China in 2024, with most of the value coming from integrated circuits, transistors and other semiconductor devices, according to economic data provider Trading Economics. In comparison, the U.S. imported more than $127 billion in electronic equipment from China last year.

"Semiconductors will feel a greater impact ... We're already witnessing a domestic ecosystem evolve in China, with direct alternatives for every major US semiconductor firm. This trend is likely to accelerate," Udupa said.

NATURAL RESOURCES

Crude prices, already under pressure from an expected OPEC+ oil output hike in May, added to the losses.

Oil majors Exxon and Chevron fell more than 5%. Top oilfield service company SLB dropped 10%, and the biggest US refiner by volume, Marathon Petroleum, fell 6%. Chemicals company DuPont slid 12%.

"The trade war escalated, recession fears rise and consequently oil demand growth is to take a sizeable hit," said Tamas Varga, analyst at PVM.

China is also the largest market for US agricultural products, even as imports of US farm goods dropped last year.

Shares of top grain traders like Archer-Daniels-Midland fell 8% while Bunge was down 6%. Fertilizer firms Mosaic and CF Industries fell 10% and 8%, respectively.

China's tariffs on US soybean exports would increase the cost to local customers, especially animal feed producers, and could prompt the country to source more from Brazil and Argentina, said Morningstar analyst Seth Goldstein.

BANKS

Banks' shares extended their declines from Thursday. The industry has been clouded by fears that a trade dispute could temper consumer confidence, reduce spending, weaken loan demand and pressure fees from advising on deals.

JPMorgan Chase, the biggest US bank by assets, sank 7%. Wall Street titans Goldman Sachs and Morgan Stanley dropped more than 7% each.

MACHINERY

Heavy machinery makers Caterpillar and Deere fell 5% and 4%, respectively, on concerns over demand from one of their largest overseas markets.

China is a major buyer of construction and agricultural equipment and a key player in global infrastructure spending.

RETAIL

Shares of major luxury and footwear firms reversed coursed after Trump said Vietnam's leader To Lam has offered to reduce tariffs on US imports. Ralph Lauren's shares were up 2.5%, while Tapestry rose as much as 3.6%.

Nike gained 4%, Roger Federer-backed On jumped 7.2% and Lululemon Athletica rose 3%. The stocks had initially fallen after retaliatory tariffs by China, a major revenue contributor.