New Release Annual Economic Monitor 2022
The Palestine Economic Policy Research Institute (MAS) has recently released the Annual Economic Monitor covering the economic performance of the Palestinian economy during the year 2022. This monitor is the product of a collaborative effort between MAS research team and its three partners: the Palestine Monetary Authority (PMA), the Palestinian Central Bureau of Statistics (PCBS) and the Palestinian Capital Market Authority (PCMA).
The Monitor has gained wide credence in various arenas and is now a reliable source of information. On the occasion of the 25th anniversary of the launch of the Annual Economic Monitor, the Director General of the Institute, Mr. Raja Khalidi, emphasized that “since the first issue of the monitor in 1997, this informational reference has never ceased to contribute, in different formats (annual and quarterly) under different fields (economic and/or social), which indicates the flexibility and responsiveness of the monitor to track developments in the domestic economic arena following varying political stages, and its continued scientific addition”
Slowdown in the Pace of Economic Recovery
and Deepening Structural Imbalances in the Domestic Economy - 2022
Year-on-year data show a slowdown in the pace of economic activity recovery in 2022, with GDP growth falling from 7.0% in 2021 to 3.9% in 2022. If the impact of the increase in the collection of customs and import taxes on GDP, i.e. calculation of the increase in the added value resulting from production and service sectors only, is isolated, growth in GDP in productive sectors falls to only 1.1%. The weak domestic economic performance in 2022 has limited the chances of various key sectors and subsectors recovering from the fallout from the coronavirus pandemic. Their output has not reached its pre-pandemic level. The added value of accommodation, restaurants, professional activities, and construction is still more than 20% below pre-pandemic levels.
The ‘Social Development” section of the Monitor highlighted the unified National Social Registry and its relationship to reducing multidimensional poverty. The Monitor Recent Literature section covered increasing the gap between the Palestinian and Israeli economies.
Highlights of 2022
The most significant economic developments in the Palestinian economy in 2022 are as follows:
- Gross Domestic Product (GDP): Palestine's GDP grew by 3.9% between 2021 and 2022 to reach about $15.6bn (at constant 2015 prices). The increase resulted from growth of 3.6% in the West Bank and 5.6% in the Gaza Strip. Taking into account the population increase, Palestine's per capita income rose by 1.2% to $3,087, distributed between $4,458 in the West Bank, compared to only $1,257 in the Gaza Strip. At current prices, GDP was $19.1bn, and GDP per capita was about $3,779.
- Unemployment: Palestine's unemployment rate at the end of the 2022 witnessed a decrease of 2 percentage points compared to 2021, reaching 24.4% (13.1% in the West Bank, 45.3% in the Gaza Strip). The average daily wage for Palestinian workers was NIS 143.8; NIS 125.7 for workers in the West Bank, ad NIS 54.9 for workers in the Gaza Strip, and NIS 276.4 for workers in Israel and its colonies. The proportion of employees earning less than the minimum wage in the private sector reached 40.2%, with an average monthly wage of NIS 935.0.
- Public Finance: Net public revenues and grants increased in 2022 by 14.9% compared with the previous year, reaching about NIS 16.9bn. On the other hand, public expenditure increased by about 7.4% in 2022, compared with the previous year, to about 14.6bn (cash base), and the total balance according to the cash base achieved a surplus of about NIS 2.3bn in 2022. The Government's total arrears during the year amounted to about NIS 3.5bn. The government's public debt, denominated in dollars, also fell by 7.9% compared to the previous year about $3.5bn (equivalent to NIS 12.5bn).
- Banking Sector: Credit facilities rose in 2022 by 2.8% compared to the previous year, reaching $11.0bn, including 19.9% for the public sector. Conversely, deposits stabilized at the same value the previous year, at about $16.5bn. Banks' profits were about $229.2m, up by 28.5% compared to 2021.
- Palestine Exchange Market (PEX): The market value of PSE listed shares was $4.9bn at the end of 2022, a 11% rise compared with 2021. Al Quds index closed at 639.7 points at the end of 2022, marking a 5% rise from the end of 2021.
- Inflation and Prices: The Palestinian economy in 2022 witnessed an inflation rate of 3.7% over the previous year due to the purchasing power of the shekel which decreased by about 3.7% compared with the previous year. Those who receive their income in US dollars and pay their entire expenses in shekels have seen their purchasing power increased by about 0.1% compared with the previous year, as a result of the rise in the exchange rate of the dollar against the shekel. Given that the JOD is pegged to the USD at a fixed exchange rate, the purchasing power of the dinar also rose by about 0.4%.
