The results of PMA Business Cycle Index (PMABCI) for April 2020 revealed that the index has severely fallen to its lowest ever, scoring -71.9 points compared to -16.5 points in last March under the emergency state declared by the Palestinian government to fight coronavirus outbreak. This shrunk resulted from the index decline in Gaza Strip, and largely in the West Bank.
The West Bank experienced wide lockdown pushing the index to its lowest ever at -78.2 points compared to -10.3 points in the previous month. All sectoral indices have declined as well, settling in the negative territory. According to the surveyed firms, more than two third of them have completely stopped working. The surveyed firms that work in the activities of construction, transport and storage, and renewable energy have totally shut down. Moreover, more than of 80 percent of surveyed working firms in trade, industry and IT have stopped working, while the agriculture sector managed to maintain the work of around 50 percent of its firms.
In details, and under the high importance of the trade and the industry in the WB’s domestic product, the lockdown pushed their indices significantly down to -31.6 points and -25.3 points, respectively, while harmed the agriculture index to drop to -6.3 points. Meanwhile, the rest of indices have declined at a lesser degree reflecting lower contribution to the total value added in the WB. However, they slipped to their bottom levels at -1.6 points for construction, -1.1 points for each of IT, and storage and transport. Finally, the index of renewable energy registered the lowest decline, scoring an index of about -0.1 points.
In general, the surveyed firm owners in the West Bank indicated wide contraction in production and sales this month, and expected the negative effects on production and employment level to continue during the three coming months.
Most of economic firms have not closed in Gaza Strip, however, the global lockdown has cast its shadows on the Gazan economy, leading its business cycle index to fall from -31.2 points in March to -56.9 points this month. According to the surveyed economic firms, the performance of most economic activities in GS have slipped to the half. In more details, trade index significantly fell to -37.7 points, while the indices of industry, agriculture and construction have declined to low levels at -7.1 points, -6.4 points and -3.0 points, respectively. At the same time, the remaining activities registered declines in their indices to -1.9 points, -0.7 points and -0.2 points for transport and storage, IT and renewable energy, respectively.
The consequences of the world lockdown posed new challenges to the Gazan economy, which has been suffering from the blockade and the deteriorating economic conditions for years. Owners of Gazan surveyed firms pointed out that the global pandemic pushed the levels of domestic production and sales toward declining, and achieving relative accumulation in inventory. Moreover, their near future expectations were overshadowed by more pessimism regarding both production and employment.
It is noteworthy that the extended PMABCI is a monthly index, which aims at capturing the state and evolution of economic activity in Palestine by tracking sectoral performance (especially fluctuations in production, sales, and employment levels). The overall index is simply the sum of all sectoral indices. Its maximum is positive 100 points, while the minimum is minus 100 points; a positive value indicates favorable economic performance, while a negative value indicates bad performance. On the other hand, a value close to zero indicates that economic performance did not change and is unlikely to do so in the near future.