Why Does Everyone Think Jordan Is a Poor Country Even Though the Jordanian Dinar Is Stronger Than the US Dollar?

The perception of Jordan as a poor country, despite the strength of its currency, the Jordanian Dinar (JOD), is a complex issue. Various economic, social, and political factors contribute to this perception, which goes beyond the mere strength of the currency. This article explores the multifaceted reasons behind this misperception.

Economic Challenges

Despite the Jordanian Dinar's strength, Jordan faces significant economic challenges that can create a perception of poverty. For example, the country experiences high unemployment rates, particularly among young people. According to Jordan's Central Bureau of Statistics, the youth unemployment rate stands at around 28.9% (as of 2021). Additionally, the country has a large public debt, which has strained its fiscal capabilities. According to the Ministry of Finance, the public debt reached 95.4% of the Gross Domestic Product (GDP) in 2020. These economic issues can lead to a perception of poverty, even when the official currency is strong.

Dependence on Imports

Jordan's economy is heavily dependent on imports for energy and essential goods, which can create financial strain. The country's reliance on imports for energy sources, such as natural gas and oil, has increased its reliance on foreign exchange reserves. According to the Jordan Tourism Development Corporation (JTDC), energy costs account for 12% of the country's total energy consumption. This dependency on imports can lead to higher prices for consumers, contributing to a lower standard of living.

The Refugee Population Challenge

The presence of a large refugee population in Jordan, primarily from Syria and Palestine, adds another layer of challenge to the national economy. The influx of refugees puts additional pressure on the country's social services and infrastructure. According to UNHCR, as of 2021, Jordan hosted over 750,000 registered refugees, which includes both Syrians and Palestinians. The Jordanian government has implemented policies to support these refugees, but this adds further financial strain to an already precarious economy.

Income Distribution

Even though the Jordanian Dinar is strong, income inequality can exacerbate the perception of poverty. This is evident in the growing disparity between the wealthy neighborhoods and other parts of the country. For instance, the royal family and other elites have substantial wealth, but the middle and lower classes struggle to make ends meet. According to the World Bank, income inequality in Jordan decreased slightly from 2010 to 2018, but it remains a significant issue. This inequality can contribute to a perception of poverty, even in the face of a strong currency.

Cost of Living

The cost of living in Jordan is relatively high, especially for some of its citizens. Despite the strength of the Jordanian Dinar, the rising cost of goods has made it difficult for many Jordanians to afford basic necessities. For example, the cost of living in Amman, Jordan's capital, is more than double that of the UK, as reported by Numbeo in 2021. This high cost of living has forced many Jordanians to live paycheck to paycheck, despite the strength of their currency.

Economic Perception vs. Currency Strength

Currency strength is only one aspect of a country's economic health. It does not necessarily reflect the overall economic well-being, living standards, or quality of life for its citizens. While the Jordanian Dinar is strong, this does not guarantee a high standard of living. The strength of the currency can sometimes mask underlying economic challenges. For example, the Jordanian Dinar's peg to the US Dollar has been in place since the 1990s, as it is a fixed parity, not a free-floating market. This artificial value can create imbalances in the economy and further contribute to the perception of poverty.

A 2021 study by the Jordan Transparency Institute (JTI) found that many Jordanians struggle to meet their basic needs, despite the strong currency. The disparity between the wealthy and the poor is stark, with many Jordanians living in poverty despite the currency's strength. This is evidenced by the large protests that occurred in 2020, when the government proposed tightening financial policies and reducing subsidies. These measures would have further increased the cost of living for many Jordanians, leading to widespread dissatisfaction and unrest.

Anecdotal Evidence

To provide a more concrete understanding, consider the following anecdote: during a bus ride in Amman, a one-way fare costs around 30 qirsh (less than a US dollar). This fare was considered incredibly cheap for an American but reasonable in comparison to a taxi ride, which can cost several dollars. This comparison highlights the disparity in the cost of living between the currency's strength and the average Jordanian's spending power. The Jordanian Dinar, while strong, has become too expensive for many ordinary Jordanians.

In conclusion, the perception of Jordan as a poor country despite the strength of its currency, the Jordanian Dinar, is a multifaceted issue. Economic challenges, reliance on imports, a large refugee population, income inequality, and a high cost of living all contribute to this perception. While the official currency is strong, the economic reality on the ground is far more complex and challenging.