The extended PMA Business Cycle Index (extended PMABCI) – April 2019
Significant decline in the West Bank and stability in Gaza Strip
The PMA has released the results of its extended Business Cycle Index (extended PMABCI) for April 2019. The results showed that the overall index declined in light of the current PA’s budget crisis, which led to only a partial disbursement (50%) of the public employees’ salaries. The WB’s index shrunk to its lowest in two years, accompanied with relatively stabilized index in GS. Accordingly, the overall index fell to around -14.1 points in April compared to 2.9 points in the previous month, and to lower than its corresponding level of the last year (-0.5 points).
In the WB, the index slipped to -7.4 points compared to 16.7 points in March as all sub-sectoral indices have declined, registering mostly negative values. This is headed by the decline in the agriculture index (from 5.4 to -2.2 points) followed by the industry index (from 6.6 to -0.3 points) and the trade index (from 2.5 to -4.0 points). The storage and transport index has also decreased (from 0.0 to -0.9 points), along with a fall in the construction index (from 1.1 to 0.2 points). Meanwhile, the drop in the renewable energy index was marginal (from 0.1 to -0.1 points).
In general, the surveyed firm owners indicated a deterioration in production and sales during the previous period. Moreover, they expressed their concerns about future production and employment in the coming three months given current political conditions and their consequent budget crisis, particularly salaries and wages of the public sector employees.
Meanwhile, the deterioration in the Gazan index eased in April, declining by only 0.1 points to register -29.9 points. This resulted from the variant performances of the sub-sectoral indices. From one side, falls occurred in the indices of industry (from -4.5 to -6.0 points), construction (from -1.9 to -2.2 points), IT and telecommunications (from -0.2 to -0.3 points) and the renewable energy (from 0.0 to -0.1 points). On the other hand, the trade index has improved (from -19.5 to -18.4 points), followed by improvements in the indices of the agriculture (from -2.5 to -2.0 points) and the transport and storage (from -1.2 to -0.9 points).
It is worth noting that the Gazan index has always registered negative values since the PMA started calculating the extended indices (since January 2017), which reflect the adverse long-lasting political and economic conditions in the Strip. During this month, firms’ owners indicated stabilized production along with slightly declined sales. However, they maintained their negative outlook about the near future.
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 and employment levels). The maximum value of the index 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.