Economic Monitor -67 - Third Quarter

author: Rabeh Morrar, Iman Saadeh, Palestine Economic Policy Research Institute - MAS , Islam Rabee, Habib Hin, Misyef Jamil
year: 2022

Gross Domestic Product (GDP): During Q3 2021, GDP at constant prices (2015 base year) grew slightly, by 0.06% compared with the previous quarter, reaching about USD 3.7bn. This resulted from a growth rate of 0.13% in the West Bank and a decline of about 0.24% in the Gaza Strip. The increase in real GDP in Q3 2021 compared with the previous quarter led to a drop of about 0.6% in real GDP per capita (a decrease of about 0.4% in the West Bank and 1.0% in the Gaza Strip), reaching USD 755 (USD 1,097.4 in the West Bank compared with 296.9% in the Gaza Strip).

Employment and Unemployment: The unemployment rate in Palestine increased by 0.9 percentage point between Q2 and Q3 2021, reaching 27.3%  14.7% in the West Bank and 50.2% in Gaza). The average daily wage in Palestine stood at NIS 137.8, distributed as NIS 125.6 for workers in the West Bank,  NIS 60.5 in the Gaza Strip, and NIS 266.3 in Israel and the settlements.

Around 28% of the private sector employees received less than the minimum wage, earning NIS 742 on average. — Public Finance: During Q3 2021, net public revenues and grants increased to NIS 3.7bn compared to 3.6bn for the previous quarter. On the other hand, during the same period public  expenditures decreased by 2.1% to about NIS 3.6bn (cash basis). Events had an impact on both public revenues and expenditures, leading to a surplus of about NIS 48m in the overall balance of grants and foreign aid. During this quarter, government arrears amounted to NIS 1,124.9m and dollar-denominated public debt rose by 2.5%, to USD 3.8bn (NIS 12.2bn).

 Banking Sector: By the end of Q3 2021, credit facilities had increased by 1.2% compared with the previous quarter to reach USD 10.5 bn, 22.7% of which is attributed to the public sector. Customer deposits grew by 3.2% during the same period to reach USD 16.2bn. Banks’ net profits for this quarter amounted to USD 46.2m, an increase of 36.7% compared with the previous quarter.

Palestine Stock Exchange (PEX): The market value of the shares of companies listed on the Palestine Stock Exchange reached USD 4.2bn by the end of Q3  2021, which represents a remarkable growth of 8% compared with the previous quarter. The Al Quds index closed at 579.5 points, an increase of 7%  compared with the previous quarter.

Inflation and Purchasing Power: In Q3 2021, the Palestinian economy witnessed positive inflation (a rise in prices) at a rate of 0.1% compared with the  previous quarter. Consequently, for those who receive and spend their income in shekels, purchasing power declined at the same rate between the two quarters. As for those who receive their wages in U.S. dollars and cover their expenses in shekels, their purchasing power decreased by 1.0%. This resulted from the 0.9% drop in the U.S. dollar exchange rate relative to the shekel and a 0.1% increase in the inflation rate. Given that the JOD is pegged to the  SD at a fixed exchange rate, the purchasing power of the JOD varied basically in line with the U.S. Dollar.


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