PMA Announces the Results of PMABCI: An Increase in the West Bank and Decrease in Gaza Strip

The PMA has published the results of PMA Indicator for the Business Cycle (PMABCI) on Wednesday April, 24th, 2013. The PMABCI aims at monitoring fluctuations in economic activity, including production, and employment, and their repercussions on the Palestinian economy. The importance of the PMABCI comes from providing real-time information about the economy, and thus, help the PMA in designing the appropriate monetary policy without having to wait for the release of macroeconomic indicators that need time for publication.

The overall PMABCI has witnessed an increase in April 2013. It increased from -2.54 during March 2013 to -2.12 in this month; with an increase in the West Bank (WB) in contrast with decrease in Gaza Strip (GS). The following figure clarifies the improvement in the WB indicator from -7.24 during March 2013 to -5.43 in April 2013. It also shows the positive trend of the WB business cycle during the period (November 2012- April 2013), which is, in turn, consistent with the improvement of WB GDP in the 4th quarter 2012, as it was recently published by the PCBS. As for the first months of 2013, PMABCI indicates continuous improvement.

However, it is not the case in GS. The strip suffers from apparent fluctuations in overall economic performance that are influenced by several exogenous and endogenous variables. Fluctuations in employment levels according to the number and size of existing reconstruction projects significantly affect household income and private demand, which, in turn, impact business sector performance. Looking at Gaza's PMABCI for April 2013, one can notice a decline in value from 2.84 during March to 0.78 this month, which is the same value for January 2013. Such results indicate that general economic conditions in Gaza had improved during February and March 2013, only to return to early 2013 levels in April.

It is important to notice that the maximum value of this indicator is positive 100, while the minimum is minus 100; a positive value indicates favorable economic performance, and the bigger this value, the better the economy. But if the value is negative, then economic performance is worsening the closer it gets to minus 100. 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.