Trade Disruptions: Jordan serves as a transit route for goods throughout the Middle East. The closure of airspace forces rerouting of flights, which can delay cargo, increase transportation costs, and disrupt supply chains. This can lead to higher prices for goods and affect Jordanian businesses that depend on timely imports and exports.

Tourism Impact: Jordan’s tourism sector, a vital source of national revenue, could suffer due to the perception of instability caused by the conflict. Tourists may choose to avoid the region altogether, leading to a decrease in foreign exchange earnings and affecting the livelihoods of those employed in the tourism industry.

Investor Confidence: Regional instability can deter foreign investment, which is crucial for Jordan’s economic growth. Investors tend to be risk-averse, and the threat of conflict can lead to capital flight and a decrease in investment flows into Jordanian markets.

Energy Costs: Any conflict involving Iran, a major oil producer, can have immediate effects on global oil prices. As a country that imports the majority of its energy, Jordan could face increased energy costs, putting additional pressure on its already strained public finances and potentially leading to inflationary pressures.

Fiscal Strain: Jordan’s public finances could be further strained by the need to enhance military readiness and border security in response to the heightened risk of conflict spillover. This could shift government spending priorities at the expense of other critical areas such as social services and infrastructure development.

To address these challenges, the Jordanian government may need to implement a range of measures. These could include seeking alternative trade routes, enhancing security measures to reassure tourists, engaging with international partners to stabilize energy prices, and pursuing economic reforms to attract resilient and diversified investment.

While the full extent of the financial implications for Jordan’s economy from the ongoing Iran-Israel conflict remains to be seen, it is clear that the situation demands careful navigation. Jordan’s historical role as a mediator and its strategic diplomatic ties will be critical in mitigating the economic fallout. The international community’s response to the unrest, as well as efforts to de-escalate tensions, will also play a significant role in shaping the economic landscape for Jordan and the broader region. 

By Roberto Casseli