poor in natural resources, and largely too arid for agriculture, Jordan is not economically self-supporting and must depend heavily on foreign aid, primarily from petroleum-rich Arab countries. Further burdens were placed on the economy after the 1967 Israeli occupation of the West Bank, which contained nearly half of Jordan’s agricultural land, and by the subsequent influx of unemployed refugees. In the late 1980s Jordan’s economy became increasingly dependent on the overland transport of goods from the port of Al‘ Aqabah to Iraq and on remittances from Jordanian workers employed in the Persian Gulf states. Both these sources of revenue were jeopardized by Iraq’s invasion of Kuwait in August 1990; the Persian Gulf War of 1991 dealt a serious blow to the Jordanian economy. In 1998 Jordan’s budget revenues were $2 billion and its expenditures were $2.6 billion.

The Jordanian economy was resilient and growing before the 1967 war. The West Bank, prior to its occupation by Israel during the war, contributed about one-third of Jordan's total domestic income. Economic growth continued after 1967 at a slower pace but was revitalized by a series of state economic plans. Trade increased between Jordan and Iraq during the Iran-Iraq War (1980–90), because Iraq gained access to Jordan's port of Al-'Aqabah. Jordan initially supported Iraqi president Saddam Hussein when Iraq occupied Kuwait during the 1990–91 Persian Gulf War, but it eventually agreed to the United Nations' trade sanctions against Iraq, its principal trading partner, and thereby put its whole economy in jeopardy. External emergency aid helped Jordan weather the crisis, and the economy was boosted by the sudden influx of 200,000–300,000 Palestinians expelled by Kuwait in 1991, many of whom brought in capital.

Jordan is a small Arab country with inadequate supplies of water and other natural resources such as oil. The Persian Gulf crisis, which began in August 1990, aggravated Jordan's already serious economic problems, forcing the government to stop most debt payments and suspend rescheduling negotiations. Aid from Gulf Arab states, worker remittances, and trade revenues contracted. Refugees flooded the country, producing serious balance-of-payments problems, stunting GDP growth, and straining government resources. The economy rebounded in 1992, largely due to the influx of capital repatriated by workers returning from the Gulf. After averaging 9% in 1992-95, GDP growth averaged only 1.5% during 1996-99. In an attempt to spur growth, King ABDALLAH has undertaken limited economic reform, including partial privatization of some state-owned enterprises and Jordan's entry in January 2000 into the World Trade Organization (WTrO). Debt, poverty, and unemployment are fundamental ongoing economic problems.