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.
2008 Archive
2007 Archive
2006 Archive
Issue 27 - December 2008 
Main reports: A 10 year strategic development plan for the Jenin Governorate was unveiled last month. It is likely to cost over $600m. It recommends a wide range of interventions, including establishing a district planning council, improving public recreation and cultural facilities, and investing in the electricity sector, education and agribusiness.
The Palestine Economic Policy Research Institute (MAS) released the results of a migration survey that investigated internal and external migration and the “brain drain”. 850 households (2730 individuals) from Ramallah, Al-Bireh and Bitunia took part in the survey. Migration improved employment prospects. 35% are now in full-time work compared to 27% before migration. 30.8% of survey respondents in the health and higher education sectors wished to emigrate, mainly for political and security reasons.
The Consumer Price Index remained steady in October with a minimal decrease of 0.1% from September 2008; 1,096 building licenses were issued in the West Bank in Q3 2008 - a decrease of 0.2% compared with Q2 2008; The Al Quds index fell by 24.5% in November to reach 423.5 points on the last day of trading. Accumulative market capitalisation decreased 17.9% from October to reach $2.03bn.Read more
Issue 26 - November 2008
Main reports: The Palestinian Authority (PA) finalised its arrears payments in October. By mid-September, $1.34bn had been transferred in direct budget support in 2008 (30% more than was pledged at the 2007 donor conference in Paris).
The Al-Ersal project was officially launched in October. The project is a multipurpose business complex on 50,000m² near the city centre of Ramallah. The project will be financed by the Land Holding Company, set up by the Palestine Investment Fund (PIF) and the Holy Land Company. It has capital of $45m and expected investment of $200m.
According to the Finance and Insurance Survey in the Palestinian Territory for 2007,
the financial sector’s total value of output was $386.5m, an increase of 29.4% from
2006. Gross fixed capital formation (a measure of new investments) was $23.5m, net taxes on production $28.3m, and operating surpluses (a proxy for pre-tax profits)
were $128.3m. Read more
Feature: Jenin Potential November 2008
Issue 25 - October 2008
Main reports: A follow up to the Bethlehem Palestine Investment Conference will take place in Nablus on 21-23 November. 100 international investors are expected to participate, as well as local businesses, academia and government officials.
Megapharm announced that they face closure as the imports of raw materials,
sourced internationally and locally, are restricted into the Gaza Strip. Megapharm is
the last pharmaceutical outfit operational in Gaza; The Al Aqsa Fund approved $15m this month for projects and relief assistance in Gaza.
Palestinian economic performance rose by 0.7% in Q2 2008 from Q1 2008 and fell
by 3.2% from Q2 2007. Gross Domestic Product (GDP) per capita in the Palestinian
Territory was static compared with Q1 2008 at $285.5 per quarter. This is 5.2% lower than Q2 2007 figures.
The PCBS Labour Force Survey for Q2 2008 showed that unemployment, according to the ILO definition, increased from 22.6% to 25.8% from the previous quarter. The survey highlighted the increasing disparity between the West Bank and the Gaza Strip. Unemployment fell in the West Bank from 19.0% to 16.3% but rose in the Gaza Strip from 29.8% to 45.5%. Read more
Issue 24 - September 2008
Main reports: The Ministry of Planning, in consultation with other PA bodies and the Sector Working Groups, has produced an Aid Effectiveness Action Plan for 2008 - 2010, which (subject to Cabinet approval) is likely to be presented at the Ad Hoc Liaison Committee of international donors meeting in New York on 22 September.
The Palestinian Business Environment is on a par with countries such as India and
Indonesia, according to the World Bank’s recently published Doing Business Report 2008.
The recent export of medical herbs by the Sinokrot Global Group (SGG) is the first
Palestinian fresh agricultural product to enter the American market since 1967.The PA announced the launch of a $30m Islamic microfinance component of the
“Deprived Families Economic Empowerment Programme” (DEEP). It will be financed by the Islamic Development Bank and administered by the UNDP with the cooperation of the PA.
Business confidence has remained steady over the summer months. The regular
PCBS survey of industrial establishments found that the percentage of Palestinian
businesses expecting production to rise over the medium term (six months) was 8.8% higher than those expecting a decline. Read more
Issue 23 - August 2008
Main reports: Dr. Jihad Alwazir, Governor of the Palestinian Monetary Authority (PMA) confirmed that the goal of establishing a Palestinian Central Bank in 2010 is on track.
The Bank of Palestine (BOP) signed a strategic partnership with the International Financial Corporation (IFC) at the end of July. The IFC will invest $15m, acquiring 5% of the bank’s equity (approximately five million shares).
On a recent visit to the Palestinian Territory, British PM Gordon Brown announced $60m for economic development, half of which has been dispersed for direct budget support. This will result in the UK providing $175m to the PA in 2008.
Japan hosted the third ministerial-level meeting of the four-party consultative unit for the “Corridor for Peace and Prosperity”, which plans to start at the beginning of 2009. The “Corridor” will enable collaboration between the Palestinians, Israelis and Jordanians on regional projects and is expected to provide more than 6000 jobs. Read more
Issue 22 - July 2008
Main reports:The PMA has introduced new networking technology that will improve the Palestinian banks’ lending process and credit approval systems. The new system gives banks immediate access to a client’s credit history anywhere in the
West Bank and Gaza Strip.
The International Finance Corporation (IFC) and the Palestinian Education Fund
(PEF) are to launch the first Palestinian private student loan facility, providing up to
$10m for approximately 8,000 students annually for four years. The World Bank will provide $12m towards the $140m Electric Utility Management Project, which aims to improve electricity operating efficiency in the Palestinian Territory.
The Gaza Chamber of Commerce reported that its economy lost over $1bn since June 2007. The report reveals that during the last two years, over 3700 plants and trade companies have shut down and more than 65,000 Palestinians have been made unemployed. Read more
Issue 21 - June 2008
Main reports: The Watan Company for Development and Investment was launched at the Palestine Investment Conference. The holding company has an initial $100m for investment (slated to increase to over $500m) and plans to open three factories
producing cement, iron and YTONG bricks. Watan also plans to merge two Palestinian banks.
In the first Palestinian pharmaceutical consignment to Europe, Pharmacare or Dar
Al-Shifa exported 2.4 million capsules of Tramal (an opioid painkiller) to Germany, following its award of the European Good Manufacturing Practice certificate in January by the German Ministry of Health.
The EU will provide €3.7m to settle the outstanding bills of 94 small and medium sized companies servicing the PA. The financial support will be administered by the EU financing mechanism PEGASE.The PA and the European Commission formally re-launched the European Neighbourhood Policy (ENP) process in May, upgrading bilateral ties and furthering EU support for the future sustainable Palestinian state. Read more
Issue 20 - May 2008
Main reports: Representatives of the private sector met Prime Minister Fayyad and other PA Ministers on 23 April, as part of an ongoing dialogue between the sides to
improve the business climate in the Palestinian Territory.
Palestinian companies are to put forward proposals to build up to 10,000 new hotel rooms in East Jerusalem, Bethlehem and Jericho over the next three years.Projects worth nearly $300m will be presented at the Palestine Investment Conference.
Following March’s court victory over unpopular measures to enforce the payment of utility bills, the trade unions reached a formal agreement with the PA in April to end the strikes protesting this move.
Palestinian companies reported healthy profits for the first quarter of 2008, with 26 out of the 33 PSE listed firms that disclosed their results ending March in the black. Of the fourteen biggest Palestinian companies, only one posted a loss in the first quarter. Read more
Issue 19 - April 2008
Main reports: Initial estimates of national accounts for 2007, issued by the PCBS at the beginning of April, show annual GDP rising by 0.7% reaching $4.136bn.
Following the census revised population figures, the per capita GDP emerges as $1,178 in 2007.
The 2008 Budget was approved by the Cabinet on 31 March, and awaits the signature of President Abbas. The total budget is worth $3.34bn, by far the largest budget ever.The PA was made to back down on its threat to cut salaries and refuse government services without proof being provided that utility debts had been paid.
The Palestinian Network for Small and Microfinance released its figures for MFI activity in 2007. These show that 12,828 loans were disbursed during the year, which brings the total number made to nearly 225,000, worth $263m. 58% of the total value of the loans was distributed in the Gaza Strip, although 83% of 2007’s loans went to the West Bank. Read more
Issue 18 - March 2008
Main reports: The value of total banking deposits in the Palestinian Territory grew by 22% reaching $5.7bn: the majority were client deposits ($5.12bn, up 22%). The credit-to-deposits ratio fell from 45.3% to 34.4%.
The International Finance Corporation signed an agreement with the Capital Markets Authority to develop the Palestinian Leasing Market. The IFC also signed a trade finance agreement with the Al Rafah Microfi nance Bank to become an issuing bank in the IFC Global Trade Finance Programme.
The value of exports rose by just over 1% to reach $339m. Imports were worth $2,835m. 74% of imports came from Israel, which was also the destination for almost 90% of Palestinian exports. The total value of trade with the European Union fell by 15% to $228m, almost all imports, while trade with the US declined 35% to $23m - 90% imports. Trade with Arab countries increased to $100m in 2006, with Palestinian exports worth $34m.
Palestinian companies released their preliminary financial data showing improved pre-tax profits in 2007. Of the 35 firms on the Al-Quds index, all but nine reported profits and 24 did better than in 2006. Read more
Issue 17 - February 2008
Main reports: A draft of the new Company Law, which aims to provide a unified framework for Palestinian fi rms in the West Bank and Gaza, has been presented at a Ramallah workshop on 2 February. The draft is expected to be finalised before the Bethlehem Investment and Development Conference in May.
The Portland Trust, together with the private sector and the PA, has developed a $1bn affordable housing programme. The programme aims to build 15,000 housing units in six new communities in the West Bank. International donor
support of $150m is now needed for infrastructure and public services.
Gazans spent an estimated $130m in Egypt following the border breach on 23 January. Public sector strikes have broken out to protest the new measures by the PA designed to reduce the debt resulting from the poor collection of electricitybills. The Jerusalem District Electricity Company is owed approximately $90m. The Consumer Price Index rose by nearly 1% in December. Read more
Issue 16 - January 2008
Main reports: BG ends negotiations with Israel over the supply of Gaza’s natural gas. The pricing issue was the primary deal breaker. Pre-paid collection systems will replace existing electricity meters in all Palestinian households. With the introduction of the pre-paid meters, as well as other measures, The PA hopes to reduce the cost of net lending (primarily due to the poor collection of electricity bills) from 10.6% of GDP in 2007 to 7.8% in 2010.
The Ministry of Telecommunications announced 15 new Broadband and VOIP licences; a Trade Promotion project is launched by PalTrade, the Palestinian
Shippers’ Council and the European Commission. The agricultural sector increases its value-added by 36.5%, reaching $557m in 2005/2006. Read more
Feature: Paris Donor Conference December 2007
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
Feature: Gazan Private Sector December 2007
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
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
