The PMA Business Cycle Index (PMABCI) – December 2020

Opposite performance in the West Bank and Gaza Strip

The results of PMA Business Cycle Index (PMABCI) revealed that the overall index has resumed declining against backdrop of the shrunk in the West Bank’s index, and despite the relative stability in Gaza Strip’s index. Accordingly, the overall index has fallen to -39.4 points this month compared to -29.0 points in last November. Moreover, the overall index is still below both the pre-coronavirus crisis levels and the corresponding level of the last year (-7.4 points).

In the Northern governorates (West Bank), the index has failed to maintain its previous gradual improvement, slipping from -21.4 points to about -36 points this month. This was resulted as all sectoral indices fell, except for the minor increase in the agriculture index from -2.7 to -1.8 points. The trade index registered the biggest drop (from -9.4 to -17.4 points), followed by the manufacturing index (from -6.5 to -12.3 points). In the meantime, the declines in the remaining sectors were lesser; (from -0.2 to -0.9 points) for the IT and communication index, (from -0.9 to -1.6 points) for the transport and storage index, (from -1.7 to -1.9 points) for the construction index, and (from 0.0 to -0.1  points) for the renewable energy index.

In general, the surveyed firm owners in the Northern Governorates indicated a remarkable drop in production and sales levels during December. Moreover, they expressed high pessimism about the near future, expecting lower production and employment in the three coming months. 

Meanwhile, the sectoral indices in the Southern governorates (Gaza Strip) experienced a narrow up and down movements, resulting in minor increase in the Gazan index, scoring around -47.5 points compared to -48.6 points in the previous month. The rises have been seen in the indices of: trade (from -39.7 to -38.6 points), construction (from -2.0 to -1.0 points) and agriculture (from 1.0 to 2.0 points). Meanwhile, the declines were in the indices of: manufacturing (from -6.0 to -7.5 points), transport and storage (from -1.4 to around -1.9 points), and IT and communication (from -0.3 to -0.4 points). At the same time, the renewable energy index maintained its previous level at around -0.1 points.

Owners of surveyed firms in Gaza indicated a relative decline in the levels of production and sales during this month. Nonetheless, they expressed optimism about near future, expecting some improvement, particularly in production levels. 

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.