There’s a popular perception in Jordan that the country’s new Iraqi nationals have sparked inflation pressures, and are creating unwelcome competition for jobs. Jordan’s population of six million now live alongside almost 700,000 Iraqi refugees, who have joined the 1.8 million Palestinian refugees already living there. Whether their new guests will spur the country’s economic growth or strain its resources, has become the focus of intense public debate.

On one side are those who say that Iraq’s wealthier refugees have stimulated Jordan’s economy by investing in property and business. But there’s a flipside: recent research has shown that Iraqis have had a negative impact on this small Arab country, which was already suffering from insufficient supplies of water, oil, and other natural resources. Poverty, unemployment and inflation remain fundamental problems.

Those who are critical of the Iraqi population there say less-affluent refugees are draining the national budget, by enrolling in Jordanian schools, using Jordanian hospitals, and consuming government-subsidized fuel and water. Some of the Iraqis who arrived with a measure of wealth have exhausted their savings over time and have since become impoverished.

Fahed Fanek, a senior Jordanian economist, views this group as an economic double-edged sword. “When you know that [Iraqi refugees] form 10 percent of the population you can imagine the positive and negative consequences,” he says.“They raised prices and rents. They crowded government, schools and caused traffic jams. … They spend money lavishly. Their investments are mainly in real estate.”

Jordan’s nominal GDP grew by 10.6 percent each year from 2002 to 2007, largely due to government reforms to open the economy, boost foreign investment and increase privatization. Rising prices, however, have become a major challenge for the Kingdom. In its most recent report on Jordan, Moody’s Investors Service praised the country’s overall macroeconomic soundness but warned that inflation remained “the main economic risk.”

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