Past issues
The Portland Trust Palestinian Economic Bulletin
The Portland Trust publishes a monthly bulletin with the Palestinian Economic Policy Research Institute (MAS) on the Palestinian economy. The monthly bulletin covers the latest economic developments affecting the West Bank and Gaza Strip (WBGS) and includes key indicators such as unemployment figures, new business starts, consumer prices, and statistics indicating the vigour of banks operating in the WBGS. Long-term trends, such as demographic statistics or changes in public sector employment, are covered when relevant. The bulletin reports major events affecting the economic and business environment of the WBGS, such as mergers and acquisitions, bankruptcies, changes in business law, changes in company leadership, and political developments. The bulletin presents an analysis of the economic indicators and news, and focuses on their implications for business and for the Palestinian economy.
Issue 15 - December 2007
Main reports: Unemployment rose by slightly over a fi fth in the third quarter of 2007. The highest unemployment is found in the Khan Younis governorate and the Hebron district.
Kerem Hashalom terminal opened to Gazan farmers for fl owers and strawberry
exports to Europe at the end of November. The opening followed intense lobbying by the PA Agricultural Ministry and an appeal by the Gazan farmers to the Israeli High Court of Justice.
Infl ation rose for the sixth time in a row in October.The CPI registered a 0.8% increase.
Third quarter accounts show that GDP in Q3 2007 was 1.2% higher than the same
quarter in 2006, but 10.3% lower than the same period in 2005.
Quartet representative, Tony Blair with Palestinian Prime Minister Salaam Fayad and Israeli Defence Minister Ehud Barak, announced in November plans for industrial zones, tourism projects and a sewage plant in North Gaza.
Tourism is on the rise with bookings over the summer of 2007 approaching pre-Intifada levels. Christmas bookings are following a similar trend. Read more
Issue 14 - November 2007
Main reports: Despite fears of an imminent cut-off of currency transfers from Israeli banks, money continued to flow to Gazan financial institutions in October. The Israeli Attorney General stayed plans by the Israeli government to reduce fuel shipments to Gaza. According to sources, Israel had intended to cut fuel shipments by 10%. Gaza’s fuel reserves would keep the effects of such a cut from being immediately felt.
The Kuwait-based Wataniya telecommunications company expected to receive Israeli clearance to use frequencies it successfully bid on in September 2006. With this approval, it will become the second Palestinian mobile phone operator.
PCBS will conduct the first Palestinian census in a decade. The UN, Saudi Arabia
and OPEC, among others, will fund the work. Inflation rose 2.17% in September,
not nearly as steeply as in August, when the Gazan economy made its initial
adjustment to closure.
Feature: The Palestinian olive harvest began in October. The olive industry accounts
for 15-20% of Palestinian agricultural output and 4.6% of GDP. Production and transport costs are 10-40% higher for Palestinian producers than in neighbouring countries. The agricultural sector continues to draw more and more of the labour force. Read more
Issue 13 - October 2007
Main reports: Three international reports survey the crisis in the Palestinian economy. Real GDP per capita has fallen over 25% since 1999. According to UNCTAD, imports totalled 86% of Palestinian GDP in 2006, and the trade deficit was 73% of GDP.
PCBS’s 2006 Economic Survey Series shows that employment in five major sectors fell by 8.5% in 2006, while the number of businesses in these sectors fell by 4.4%.
Rising prices in Gaza drove inflation up at its fastest rate this year. The CPI rose 4.19% in Gaza and 2.17% overall. Preliminary national account figures from PCBS
show GDP rising by 6.5% in the second quarter of 2007 compared with the first quarter, reflecting the impact of public sector strikes in the earlier period. Compared with the second quarter of 2006, GDP in the second quarter of 2007 fell by 4.9%. Read more.
Issue 12 - September 2007
Main reports: A combination of fuel cut-off by Israel and funding cut-off by the EU left large parts of Gaza without electricity over a weeklong period in August. Service was restored by the end of the month, but with half of Gaza’s local generators idle and imported power limited, electricity demand continued to outstrip supply.
Continuing the general trend of the last several quarters, unemployment declined in
the second quarter of 2007, although it remained high at 20%. However, following the Hamas take-over of Gaza and subsequent isolation of the Strip, unemployment is likely to have soared in the third quarter.
A law that encourages investment in the Palestinian Territories has been extended for two years. Although granting favourable tax treatment to new investment, its principal effect is likely to be to boost existing businesses.
Hotel bookings continued to rise in the second quarter of 2007, but they still fell short of their levels in the second quarter of 2000, before the outbreak of violence.
While average Palestinian consumer prices rose for the third straight month, carried upward by infl ation in Israel, prices in Gaza actually declined, with the West Bank and East Jerusalem accounting for all the increase in the CPI. Read more
Issue 11 - August 2007
Main reports: The closure of Gaza to virtually all commercial traffic brought much of its industry
to a halt. UNRWA ceased construction on all of its Gaza building projects for lack of
cement. Farmers were approaching the planting season without seeds.
The UK began to help the PA pay off its debt to the private sector, contributing £3m to this end. European countries, meanwhile, contributed an additional €21m toward civil servant salaries and pensions.
The PA announced a “Quick Recovery Programme” aimed at reviving the Palestinian economy. The IMF, meanwhile, reported that the PA had gone a long way toward restoring the financial controls that existed before Hamas’ election.
A new study concluded that there were 190,000 potential microfi nance customers in the Palestinian Territories, but that only 10% were beingserved.
Hebron-area businessmen warned against the economically harmful effects of a new crossing about to be built in the southern West Bank.
The Israeli Ministry of Infrastructure approved construction of an additional generator
to serve northern Gaza, which has been suffering blackouts due to high demand and a shortage of spare parts for existing generators. Read more
Issue 10 - July 2007
Main reports: Already diminished in May, traffic in and out of Gaza almost completely ceased in mid-June when Hamas seized control of the Strip. Gaza’s two primary passages for commercial traffic were virtually closed, with only isolated shipments of grain allowed through the Karni crossing and a trickle of people allowed through Rafah. Limited quantities of some essential goods were, however, able to pass through secondary crossings.
From January to March, for the third straight quarter, Palestinian GDP declined. It was down 4.2% compared to the last quarter of 2006 and down 13.4% compared to the first quarter of 2005. With the population rising, this meant an even steeper decline in GDP per capita.
Household consumption, supported by borrowing, declined only slightly in 2006, but the pattern of consumption shifted ever more heavily toward essential goods. Prices also rose in May, reversing a three-month decline.
British Gas, which had expected to announce an agreement to deliver gas from Gaza to Israel, said political uncertainty arising from Hamas' takeover of the Strip would postpone the deal. Hamas said that in principle it accepted the agreement, which was expected to be worth $1bn to the Palestinian economy. Read more
Issue 9 - June 2007
Main reports: Israel’s Deputy Defence Minister confirmed that construction at five industrial zones in the Palestinian Territories would go ahead. Construction at two of the sites, near Tulkarm and Jenin, was already underway, but concerns remained that the ventures could falter without clear protocols regarding access and movement to and from the industrial zones.
Unemployment fell slightly in the Palestinian Territories in the first quarter of 2007, but this decline was due to a fall in the labour participation rate, as the total number of jobs also actually fell.
A deal between British Gas and the Israel to supply the country with natural gas for a 15-year period appeared imminent. British Gas discovered a large field of the coast of Gaza in 2000, but political and other difficulties had delayed its exploitation.
The formation of the Israeli-Palestinian Business Council was announced at a meeting of the World Economic Forum in Jordan. The Council will foster relationships between the two busines communities that it hopes will form a basis for peace. Read more
Issue 8 - May 2007
Main reports: The World Bank’s Investment Climate Assessment warned that restrictions on movement and access, together with structural distortions, threatened to keep the Palestinian economy falling further behind.
A ruling by the Supreme Court of New York permitted the Palestinian Monetary Authority to resume operations in the US. These had been enjoined as a result of an earlier lawsuit again the PNA and PLO.
Current restrictions on Gaza’s fishermen curtailed their livelihood and might lead to longterm damage to fishing stocks, warned the UN’s Office for the Coordination of Humanitarian Affairs.
Following a bumper harvest of olives, oil production rose dramatically in 2006, with the value of the output, at $12.3m, up 664% compared to 2005 and 133% compared with the last ‘bumper harvest’ in 2004. Read more
Issue 7 - April 2007
Main reports: Palestinian GDP is likely to have decreased by 8% in 2006, according to a joint IMF/World Bank assessment, within a wide 5-10% band of estimates reflecting the uncertainty of data. This compares with a preliminary estimate of 6.6% published by the PCBS.
Trade volumes at the Karni crossing have fallen for the first time since September. PalTrade and the Peres Center, meanwhile, have issued a report that shows how inefficiencies constrain trade at crossing points and offers a concrete plan to minimise them.
The World Bank issued a study demonstrating the benefits of establishing a Gaza-Egypt trade route passing through the Rafah crossing as an alternative to the Karni route.
The Japanese government has agreed to sponsor the construction of an agroindustrial park near Jericho. The facility would be used to process agricultural produce from across the West Bank. Read more
Issue 6 - March 2007
Main reports:
The education-sector strike that lasted throughout the fourth quarter of 2006 had a major impact on the published GDP figures, which fell by 21.2% compared with the same period a year earlier. This reflected the accrual method of accounting used by the Palestinian Central Bureau of Statistics.
Unemployment fell in the fourth quarter almost entirely on the strength of an abundant olive crop. Employment in sectors outside agriculture declined, and Gaza’s unemployment rate continued to be double that of the West Bank’s.
The US will appoint a representative to facilitate the export of Palestinian goods from the West Bank and from Gaza, where traffic at the Karni crossing continues to increase.
Profits at PADICO, the main Palestinian development and investment fund, were disappointing in 2006, coming in substantially lower than 2005 profits. The fall was attributed to the instability of the Palestinian economy in the last year, but the poor performance of overseas investments was also partly responsible. Read more
Issue 5 - February 2007
Main reports:
The preliminary 2007 draft budget has been rejected by the PLC Parliamentary Budget Committee. At almost $2.6 billion, it is the largest budget ever proposed by the PNA.
The election of a Hamas government changed international aid patterns in 2006. Increasing financial support from the Arab states constituted a considerable portion of international aid. Most of the money was channelled through the Office of the President.
Turkish and Palestinian officials signed a MOU to revitalise, develop and manage the Palestinian Industrial Free Zone at Beit Hanoun in Gaza. Officials hope that the zone will support 10,000 jobs.
The first conference of the Palestinian Shippers Council took place in January. Conference speakers stressed they cannot be competitive unless transaction costs, especially those associated with transportation, fall. Read more
Issue 4 - January 2007
Main reports:
The Agreement on
Movement and Access
signed a year ago has failed
to live up to its aims,
according to a UN review.
Twelve UN aid agencies
active in the Palestinian
Territories launched a
combined appeal for
$453.6m worth of
emergency humanitarian
assistance to meet their
2007 budget needs.
Businessmen in the West
Bank remain gloomy about
their prospects, according
to the latest survey by the
PCBS. Gazan businessmen,
however, remained relatively
optimistic.
After several months of
decline, prices of certain
consumer goods, especially
food, rose in November. The
price of housing, however,
continued to fall.
The Board of Directors of the Capital Market Authority announced that
licensed investment funds will soon be introduced to the Palestinian Stock
Market. Read more
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Issue 3 - December 2006
Main reports:
Overall unemployment rates
rose from 22.9% to 24.2%
in the third quarter of 2006.
Joblessness rose most in the
Gaza Strip (36.3%
unemployed) compared
with the West Bank (19.1%
unemployed).
The number of issued
building licenses fell by
35.8% in the third quarter, suggesting that the
construction industry will
continue to contract.
Mounting costs led to a
sharp reduction in the
added value of the
agricultural sector in 2005.
The consumer price index
declined for the second
month in a row, falling by
-0.42% in October. The fall
can be linked to deflation in
the Gaza Strip and East
Jerusalem.
The number of guest nights
at Palestinian hotels
declined 9.2% in the third
quarter compared with the
same period in 2005. Read more
Issue 2 - November 2006
Main reports:
The IMF reported that
public funds had shrunk to
around US $500m between
April and September this
year, compared to more
than $1.2bn in the same
period last year.
The Karni crossing point
between Gaza and Israel
was open for most of September; the number of
checkpoints across the
Palestinian territories rose.
PNA indebtedness to local
banks has been cut back
significantly in recent
months. Cash from the
Palestinian Investment Fund
was used to work down the
position, while the banks
also offset their tax own
liabilities and withheld tax
revenues from the PNA.
Consumer prices fell in
September for the second
time this year; The World
Bank issued a report
highlighting the export
potential of Palestinian
olives. Read more
Issue 1 - October 2006
Main reports:
Second quarter national
accounts show a GDP decline
of a modest 1.7% compared
with the previous quarter and
an increase of 1.7% compared
with the same quarter in 2005.
There was a sharp upturn in
business confidence in Gaza in
August, although the business
community remained cautiously
negative in the West Bank.
Second jobs and financial
assistance from the private
sector and abroad were among
the support mechanisms used
by public sector employees to
cope with the shortfall in salary
payments.
The job market was little
changed through the summer;
building licence pplications
saw a seasonal rise; tourism
was up before the outbreak of
the war in Lebanon.
The first phase of an electrical
link between Egypt and
the Gaza Strip was
announced; Kuwaiti Wataniya
Telecommunications won the
second cellular phone licence. Read more
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