Written by Dr. Ayman Al-Khazaaleh
Recently, a series of eye-catching statements have emerged about Jordan's completion of the reassessment of national accounts and the change of the base year to 2023 after four years of work. This was accompanied by an unprecedented step of including the informal economy and digital activities in the GDP estimates for the first time, which resulted in an upward revision of the GDP by about 10%, along with a decrease in the debt-to-GDP ratio according to the new accounts, and a change in the unemployment rate to total population. These developments seem to reveal a notable improvement in the economic scene, but a critical reading opens the door to a central question: Does this represent a true economic achievement reflecting accuracy and evolution in measurement, or is it a cosmetic attempt to improve the general image without actual change in reality?
Changing the base year for national accounts is a necessary step that countries typically take every 5 to 10 years, as economic structures evolve and new sectors emerge while others decline. From this angle, Jordan’s decision to update the base year after four years of work is, in principle, a commendable effort indicating careful attention to data accuracy and updating to match the new economic reality. However, despite its technical importance, this kind of update is prone to media and political use, especially when presented as evidence of tangible economic improvement felt by citizens, which does not necessarily align with the truth..
The inclusion of the informal economy and digital activities in the GDP estimates for the first time is an important development reflecting recognition of the size of sectors that were operating outside the official records. The shadow economy in Jordan is large and influential, and its inclusion automatically increases the GDP figure that was previously lower than reality. Also, the inclusion of digital economic activities represents a natural evolution in the context of the global shift towards a digital economy. Although this step is scientifically precise and represents an advance in measurement methodology, it does not indicate actual growth or an improvement in economic conditions, nor a change in the actual production or income levels, but simply means that the measurement process has become more complete and comprehensive..
This leads to the most prominent point in official and media discourse: the 10% increase in GDP after updating the methodology of national accounts. This figure, as promising as it may appear in isolation, does not reflect any real economic expansion. Exports have not increased, nor has productive capacity, nor have individual incomes risen. All that has occurred is an adjustment in the estimation method to make the calculation more inclusive. It's like a scale that has been adjusted to show a number that is less or more, without any change in the actual weight. Thus, the increase in GDP is purely statistical, and not a true economic growth..
As a result, and because the debt-to-GDP ratio depends on the size of the GDP, this ratio automatically decreased after revising the GDP upwards. Here, the cosmetic improvement is clear: the debt itself has not decreased, neither in size nor as a burden, nor in terms of its service costs. The only change is that the number by which we divide the debt has become larger, meaning that the improvement has occurred in the indicator, not in reality. This is the real essence of the decrease in the debt ratio after the new estimates, and it makes this “improvement” a cosmetic and paper-based enhancement that does not reflect a real financial improvement or a reduction in the public debt burden..
Regarding the decrease in the unemployment rate to the total population, this result often appears after any update to census methodologies and population estimates. This decrease does not indicate an improvement in the labor market unless the actual number of employed people changes or real job opportunities expand. The reality is that this type of decrease may be more a result of demographic or methodological factors than a reflection of economic change or improvement in employment opportunities..
When all these elements are combined, it becomes clear that what Jordan has done in updating the national accounts is a necessary scientific step that must be appreciated and respected for its methodological importance. It is important that statistical tools are accurate, and that the GDP reflects the actual size of the economy, and that the informal and digital sectors are included. However, at the same time, it is important to be cautious about using these updates to mislead people about a tangible economic improvement that has not actually occurred. The numbers may sparkle on paper, and the output might appear larger and the debt smaller and the unemployment less, but reality does not change except with true growth in production, with an improvement in individual incomes, with the creation of job opportunities, and with an increase in productivity..
Here emerges an essential truth that must be emphasized: the success or failure of governments is not measured by abstract numbers, nor by statistical improvements, nor by results formulated in official reports, but is measured by what citizens experience in their daily lives. The data on which the success or failure of a government is based are not embodied in the shiny numbers, but in its ability to improve public services provided to citizens, including education and health, in its ability to provide real job opportunities for unemployed youth, alongside reducing the deficit in the general budget in a tangible and sustainable way. Success also appears in stopping the rotation of positions among the same individuals, in combating corruption and holding those involved accountable without tribal or positional considerations, and in raising the salaries of retired military and civilian personnel, especially the old ones whose incomes have eroded over the years, in addition to reducing the exorbitant salaries of some officials so that they become aligned with the state's capabilities and social justice standards. These standards collectively, not the paper indicators, create trust and determine the direction of the compass between the success of policies or their failure. Without actual improvement in these aspects, statistical updates remain like glossy paint over a cracking wall..
