Forgotten Jordan back on the radar – MENA Q1 results

Jeremy Weltman
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Jordan’s risks remain high. Rated Ba1 by Moody’s and BB by S&P, but on negative watch, the country scores less than 50 out of 100 and is firmly within ECR’s tier four.

Affected by the increased political tensions and disrupted supply lines arising from the Syrian conflict, along with strikes and weakened export markets, the country’s economy and social stability is marred by high inflation and unemployment, and a double-digit current account deficit.

However, the IMF predicts that real GDP growth will accelerate to 3.3% this year and to 3.5% in 2014, after posting 2.7% growth in 2012. And Jordan’s score has improved by 1.3 points since Q4 2012, levering it upwards three places in the global rankings.

The sovereign has now exchanged places with sinking Tunisia, a country still falling out of favour lately partly because of heightened concerns about its bank stability and institutional risks.

Other countries lying along the southern Mediterranean – Algeria, Libya and Egypt – have all been subjected once again to lower ECR scores since the end of last year, highlighting the enduring nature of the post-Arab Spring difficulties.

All four have scores below 50 out of 100 and all except for Algeria have seen their scores marked down substantially compared with the levels prevailing three years ago – Egypt and Libya by approximately 17 points each during a tumultuous period. Political assessment scores range from a paltry 27 to 35 out of 100 on all counts.

Lebanon, by contrast, has seen its ECR score improve by 1.7 points, on the back of better economic fortunes, evinced by indicators showing port activity increasing, and a calmer political environment aided by the speedy installation of a new prime minister.

However, it marks only a small climb back for the troubled state, given a single B credit rating by all three agencies. On just 38.5, Lebanon is still 7.8 points below the score prevailing three years ago, weighed down by low values for specific factors, including the government’s stability and its finances.

This article was originally published in Euromoney Country Risk.