RIYADH: Jordan’s long-term foreign-currency issuer default rating has been affirmed at “BB-” with a stable outlook by Fitch, citing the country’s macroeconomic stability and progress in fiscal and economic reforms. 

The US-based credit rating agency added that the grade, along with the stable outlook, also reflects Jordan’s resilient financing sources — including a liquid banking sector, a robust public pension fund, and continued international support. 

Despite the stable outlook, Jordan’s credit rating remains lower than that of several other countries in the region. In February, Fitch affirmed Saudi Arabia’s IDR at “A+” with a stable outlook, while the UAE was rated “AA-.” 

In its latest report, Fitch stated: “The ratings are constrained by high government debt, moderate growth, risks stemming from domestic and regional politics, and current account deficits and net external debt that are higher than rating peer.” 

According to the agency, a “BB” rating signifies elevated vulnerability to default risk, particularly in the event of adverse changes in business or economic conditions over time, although some business or financial flexibility exists to support the servicing of financial commitments. 

The report noted that Jordan’s government remains committed to advancing its three-pillar reforms across the economic, public administration, and political sectors, despite external pressures. 

Fitch added that the pace of reform will continue to be influenced by the need to preserve social stability, resistance from vested interests, and institutional capacity constraints. 

Jordan’s gross domestic product expanded by 2.5 percent in 2024, and Fitch projects growth of 2.7 percent in 2025 and 2.8 percent in 2026. 

“This reflects our assumptions of headwinds from weaker global growth, partly balanced by recovery in tourism from Europe following an easing of regional conflicts. Iraq will remain a dynamic export market for Jordan and nascent trade with Syria could add further impetus,” the report said. 

In April, the International Monetary Fund offered a similar projection, forecasting 2.7 percent growth in 2025, driven by a rebound in tourism and improved domestic demand. 

Fitch also noted that the imposition of US tariffs and the resulting uncertainty will slow global demand, which is expected to impact demand for Jordanian exports. 

Exports to the US accounted for 26 percent of Jordan’s total in 2024, including 27 percent from precious metals and stones — categories that are exempt from duties. 

Apparel made up 56 percent of Jordan’s exports to the US, and this sector faces the risk of a 20 percent tariff. 

According to Fitch, the general government deficit stabilized at 2.4 percent of GDP in 2024, amid higher interest payments and lower capital expenditure. 

The agency projects the deficit will rise to 2.6 percent in both 2025 and 2026, as continued spending restraint is offset by growing interest costs. 

The report further warned that persistent geopolitical risks could negatively impact Jordan’s credit profile, even as it benefits from strong multilateral and bilateral support. 

“As tensions between Israel and Iran remain heightened and the war in Gaza continues, geopolitical risks remain high. Uncertainty remains regarding the course and duration of the conflict,” said Fitch. 

Other factors that could weigh on Jordan’s credit rating include a weakening of support from external partners and a marked increase in external indebtedness. 

Jordan is on track to receive disbursements under its four-year, $1.2 billion Extended Fund Facility with the IMF. 

It has also entered into a new program with the EU, which includes €1 billion ($1.07 billion) in macro-financial assistance. 

Fitch identified several factors that could lead to a rating upgrade, including a sustained decline in government debt as a share of GDP and a return to growth levels above pre-pandemic averages, resulting in lower unemployment.

TOKYO: Oil rose on Thursday after falling more than $1 in the previous session, supported by hopes of a breakthrough in looming trade talks between the US and China, the world’s two largest oil consumers.

Brent crude futures were up 10 cents, or 0.2 percent, at $61.22 a barrel, while US West Texas Intermediate crude rose 13 cents, or 0.2 percent to $58.20 a barrel at 9:32 a.m. Saudi time.

“Optimism around the US and China trade talks this weekend is a primary factor supporting the rebound in the oil market,” said independent market analyst Tina Teng.

“Signs of a de-escalating trade war improved market sentiment, triggering a rebound in oil prices in an oversold market.”

US Treasury Secretary Scott Bessent will meet with China’s top economic official on May 10 in Switzerland for negotiations over a trade war that is disrupting the global economy. The countries are the world’s two largest economies and the disruptions from their trade dispute are likely to lower crude consumption growth.

US President Donald Trump on Wednesday suggested China initiated the trade talks, adding he was not willing to cut US tariffs on Chinese goods to get Beijing to negotiations. Bessent said the upcoming talks are a start, not ‘advanced’ discussions.

Weak demand concerns capped oil price gains after the Federal Reserve held interest rates steady but warned about rising economic uncertainties.

“The Fed signalled that rates will likely remain on hold until the effects of tariffs become clearer. This boosted the US dollar, which added to headwinds facing the broader commodity markets,” said ING analysts in a report on Thursday.

A stronger US currency makes dollar-denominated oil more expensive for holders of other currencies and dampening demand.

Adding to the concerns of weaker demand, US gasoline inventories rose last week, stoking concerns among analysts that consumption is not building as the US enters the summer demand period later this month.

At the same time, the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, will increase its oil output, adding to pressure on prices.