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EBRD to invest in West Bank and Gaza

The EBRD Board of Governors has approved the engagement of the EBRD in the West Bank and Gaza for an initial period of five years to support the development of the economy with investments through a trust fund.
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MoU signed between the Palestine Monetary Authority, GIZ and Sanad Fund

With the aim of strengthening consumer protection and financial literacy in Palestine, the Palestine Monetary Authority (PMA), GIZ and the SANAD Fund for MSME’s Technical Assistance Facility agreed on a joint project supporting the PMA’s consumer relations halls today
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The PMA Monthly Business Cycle Index (PMABCI) - May 2014

May Brings More Declines in the Business Cycle

The PMA has released the results of its Business Cycle index (PMABCI) for May 2014. The PMABCI is a monthly index which aims to capture the state and evolution of economic activity in Palestine by noting performance of the industrial sector, especially fluctuations in the production and employment levels and implications for the economy at large. The construction of the indicator is based on qualitative data obtained from monthly business surveys of a representative sample of industrial institutions’ owners/mangers as to the value of various leading indicators during a specified period, and their expectations for the coming months. After that, the data is processed to construct a quantitative PMABCI.

During May, The overall PMABCI witnessed a further decline, dropping from -0.56 point in April to around -4.3 point this month, as a result of the deterioration in the West Bank (WB) and Gaza Strip (GS) indicators, compared to the previous month, as well as to the corresponding month of 2013 (see the attached figure).

In WB, the business cycle index has deteriorated from 2.68 point to around -3.37 point this month, due to the decline in all industrial activities, except a relative improvement in food and paper activities. However, the textile sub-sector was regarded as the main contributor to this decline, where its index decreased from 1.89 point in April to around -0.63 point in May. This decline in the WB is considered to be the worst since the beginning of this year.

The May data indicates less optimism about the near future among industrial firms, influenced by their bad performance this month. However, the index was still at higher levels compared to the corresponding month of 2013. This decline in the level of optimism about the near future was in light of fears that prevailed by the end of last month about returning to the disruption of salaries of public sector employees, especially after the new measures announced by the Israeli government against the Palestinian Authority following the cessation of negotiations between the two parties. These included mainly (i) the direct deduction from clearance revenue of benefits to Israeli institutions and companies (especially the electricity company), and (ii) the reduction of ceilings of deposits of Palestinian banks at Israeli banks, which means rejection of receiving Israeli shekel surplus aggregated by banks operating in Palestine.

In GS, the index declined this month to -12.13 point, compared to -9.14 point in April. This decline is mainly caused by a huge deterioration in food sub-sector (which forms around one third of GS's industry) from 0.0 point to around -3.42 point, in addition to a decline in the construction sub-sector, during the comparison period.

It is noteworthy that GS index has suffered a remarkable drop since the beginning of this year, reflecting the continuous deterioration in economic, political and security conditions in the strip, mainly because of the political tensions with Egypt. This is in addition to the continued Israeli siege and its effects on overall economic activity, mainly continued restriction on the movement of goods and individuals.

As to the future prospects, data still indicates high pessimism among Gazan industrial firms this month, compared to the previous and corresponding months, as a result of diminishing economic activity. However, the potential for an improvement in GS's index in the coming months still exists, but is subject to accomplishing the Palestinian reconciliation, ending the political schism between the WB and GS, and substantial easing of the cross border siege with Egypt.
It is important to note that the maximum value of the PMABCI is positive 100 point, while the minimum is minus 100 point; a positive value indicates favorable economic performance, and the bigger this value, the better the economy is. But a negative value indicates that economic performance worsens the closer this value 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.
 

Categories: PMA, Statistics

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