Press release The PMA Business Cycle Index (PMABCI) – March 2021

The PMA has released the results of its Business Cycle Index (PMABCI) for March 2021, which revealed a slight decrease in the overall index from -23.3 points to -24.1 points due to varying performance in the West Bank and Gaza Strip. While the index declined notably in the West Bank, it managed to increase remarkably in Gaza Strip. Moreover, the registered overall index during this month is well-below its levels in the corresponding month of 2020 (-16.5 points).

In the West Bank, the healthcare system reached a critical situation under the third wave of Covid-19 pandemic, pushing the government to impose another full economic lockdown. Accordingly, the West Bank index has declined again from -19.1 points last month to around -22.9 points this month. Most indices of economic sectors have fallen remarkably, headed by the drop in the trade index (from -7.8 to -15.8 points), followed by the manufacturing index (from –6.4 to -7.3 points) and the transport and storage index (from -0.5 to -0.6 points). On the other hand, the agricultural index witnessed a notable rise (from -3.6 to 0.9 points), accompanied with an increases in the IT and communication index (from -0.2 to 0.1 points) and the construction index (from -0.5 to -0.3 points). In the meantime, the renewable energy index stayed relatively stable at around -0.1 points.  

In general, the surveyed firm owners in the West Bank indicated a remarkable rise in production level during March without a corresponding increase in sales, leading to an accumulation in inventory. Moreover, pessimism has prevailed about future expectations as the firm owners expressed their concerns about the production and employment in the three coming months.

However, the index in Gaza Strip witnessed a remarkable improvement this month, reaching its highest in a year at around -27.0 points compared to -33.2 points in last February. This was resulted as most surveyed economic activities have risen except for the drop in the trade index (from -24.0 to -28.0 points) and the slight fall in IT and communication index (from 0.0 to -0.1 points). Nonetheless, the agricultural index has remarkably increased (from around -3.4 to 4.4 points), followed by the manufacturing index (from -5.0 to -3.2 points), in addition to the indices of transport and storage (from 0.5 to 0.9 points) and the construction (from-1.3 to -1.2 points). Finally, the renewable energy index maintained its previous level at around 0.0 points.  

In general, the owners of the surveyed firms in Gaza indicated improvement in production and, to a higher extent, sales during March, which in turn resulted in lower levels of inventory. This improvement has been reflected in better expectations in the near term, particularly for the production levels.

It is noteworthy that the extended PMABCI is a monthly index that monitors fluctuations in Palestinian economic activity in terms of 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.