Growth in the Palestinian economy continued to slow down. Real quarterly GDP in Q2/2013 was 1.2% higher than in the same quarter a year earlier, although it grew by 7.9% from Q1/2013. Year-on-year growth in real quarterly GDP was lower in the West Bank, 0.3%, than in the Gaza Strip, 3.5%.
Still, the West Bank economy contributed 72.6% of total GDP in Q2/2013, and its quarterly nominal GDP per capita was almost twice as high as that in the Gaza Strip. Real GDP per capita was unchanged in the Gaza Strip between Q2/2012 and Q2/2013, while it decreased by 2.3% in the West Bank.
The most dynamic sectors in both the West Bank and the Gaza Strip in Q2/2013 compared to Q2/2012 include transportation and storage; financial and insurance activities; mining, manufacturing, electricity and water; and construction. Contractions were observed in wholesale and retail trade, public administration and defense and, in the West Bank, in information and communication and in agriculture.
Three sectors, namely construction, services and public administration and defense, accounted for more than 70% of total GDP in the Gaza Strip in Q2/2013. Economic activity in the West Bank was more evenly distributed among sectors, with services as the biggest sector, followed by mining, manufacturing, electricity and water.
Gross capital formation was relatively low in Q2/2013, at 17.2% in the West Bank and 8.4% in the Gaza Strip, and it decreased in both regions relative to Q2/2012. Gross fixed capital formation played a more important role in the Gaza Strip than in the West Bank both as a proportion of GDP and as a proportion of gross capital formation. Final consumption in Q2/2013 grew relative to Q2/2012 in the West Bank and it decreased in the Gaza Strip, but it still exceeded GDP in both areas, at 118.7% of GDP in the West Bank and 142.7% of GDP in the Gaza Strip. Household consumption accounted for 78.9% and 64.8% of final consumption in the West Bank and the Gaza Strip, respectively, and government consumption represented 20.3% and 30.9% of final consumption, respectively. These levels of consumption and gross capital formation were possible through import levels that exceeded exports, that is, through a trade deficit or negative net exports. Net exports increased in both regions in Q2/2013 relative to Q2/2012.
The industrial production index (IPI) reached 118.56 in June 2013 (base year is 2011). Activity in the mining and quarrying sector (with a share of 4.59% in the IPI) increased in the three months to June 2013, whereas activity in manufacturing (with a share of 80.56% in the IPI) decreased in June 2013 and activity in the water and supply sector (with a share of 14.85% in the IPI) decreased in April 2013.
Following contractions in some industrial sectors, the business cycle indicator reflected a large decrease in June 2013 in the West Bank and a more modest one in the Gaza Strip, where it remained positive throughout Q2/2013.