“The rate of economic growth for the whole year will be around 4.4 per cent at constant market prices, down from 6 per cent registered in 2007,” says Tayseer Smadi, economist and former planning minister at First Strategieh Consulting.

Any decline in economic growth will increase the size of the budget deficit because the Ministry of Finance has assumed growth of 6 per cent in 2008.

Even if the economy grows by 6 per cent, the budget deficit for 2008 will be JD826m ($1.2bn), about 6.5 per cent of gross domestic product (MEED 4:7:08).

First Strategieh says high inflation in the kingdom had increased production costs for the agriculture, manufacturing and construction sectors.

“The rise in the interest rates on credit facilities, coupled with the record rate of inflation, is expected to contribute to undermining total demand,” says Smadi.