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Source: United Nations Special Coordinator for the Middle East Peace Process (UNSCO)
31 January 2009

Since 1996 UNSCO has continually monitored and reported on socio-economic conditions in the occupied Palestinian territory and in the process established an extensive socio-economic database. UNSCO does not create raw data but rather uses available data which, in the occupied Palestinian territory is relatively abundant. However, the data that is available tends to remain dispersed and is not always automatically shared between institutions. The objective of the database is to bring together in one place a wide variety of data on socio-economic conditions and by doing so present a broader, more detailed perspective on socio-economic conditions. The purpose of this report is to: 1) broaden the access to this database through publication of the most recent data gathered; and 2) provide readers with up to date information on socio-economic conditions in the occupied Palestinian territory.

The report is divided into three sections:

Section 1 consists of a one-page fact sheet which provides a snapshot view of the socioeconomic situation of the current and previous reporting period and for reference purposes provides base line figures for the period just prior to the outbreak of the second Intifada.

Section 2 and 3 report on the Macro-economic and the Private sector and banking modules of the UNSCO database. They provide data on the last six reporting periods for each indicator as well as base line data. In addition, some initial analysis on observed trends is given below each table.

1 These numbers may be adjusted
2 For a more detailed report on sections C (Macro-economy) and D (Private sector), see data below.
3 CPI Base year 2004 = 100
4 MoNE data does not include aggregates or aid flows in Aug 2000.
5 * Please note that data for Q2-2008 has been adjusted by the PMA for all bank credit categories.
6 Adjusted unemployment is calculated by adding discouraged workers (i.e. unemployed but no longer seeking work) to the ILO standard.
7 Effective closure days are calculated by adding all days when a crossing was fully or partially closed excluding weekend and holidays.

For further information please contact: Ramallah: Bushra Mukbil; Gaza Strip: Raed Raqeb

The New Israeli Shekel slightly depreciated against the US dollar in January, 2009.

Volume of registered fuel sales in the Gaza Strip saw a sharp decline in January 2009. This drop is due to the situation in Gaza, and closure of Gaza border crossings. 92.0 liter of Gasoline was imported for UNRWA and only 0.9 ton of Gas for the private sector.

The Palestinian CPI figures in the oPt have continued its steady decline since September 2008. In January 2009, it declined by approximately .71 percent for the oPt, and by 1.09 for the West Bank, while it increased for the Gaza Strip by .15 percent.

Truck movement to Gaza has been restricted to humanitarian supplies since 12 June 2007. Exports were stopped altogether at the same time except for limited agricultural exports. January 2009 data indicates a significant increase in the total of imported truckloads to the Gaza Strip by
approximately 68 percent. No cement or gravel was allowed in through Karni, and only 656 trucks of wheat, spices, pulses, and animal feed.. Of the 2089 trucks imported through Kerem Shalom, 1155.5 were humanitarian trucks and 937.5 trucks for the private sector. It is vital to note that for the first time since 7 September 2005, 273 humanitarian and food items were imported through Rafah crossings.

For further information please contact: Ramallah: Bushra Mukbil; Gaza Strip: Raed Raqeb

The number of new companies registering is used as a proxy indicator for the vitality of the local economy as well as the ability of the local economy to create new employment. New company registrations in the West Bank considerably increased in January by 29 percent, if compared to
December. However, if compared to pre-Intifada levels, new company registrations have significantly dropped by approximately 75%. As for Gaza, figures from the Ministry of Economy in Ramallah show that the number of new company registrations has remained at zero, while data from
the authorities in Gaza indicate 4 new registered companies for January 2009. If considering data from authorities in Gaza, then figures for newly registered companies in Gaza markedly dropped in January 2009, due to the War on Gaza.

Similar to new company registrations, the area licensed for new construction is also used as a proxy indicator for economic vitality. January 2009 data indicates a sharp drop in the area licensed for new construction, if compared with December 2008 data. The December 2008 data showed a significant increase because all non-completed construction were resubmitted for licenses by year end to ensure that the new licenses will be issued for the following year resulting in largely inflated numbers. Equally, as some engineering offices and consulting firms have not yet confirmed their registration as licensing offices, the January data might be skewed downward.

If disaggregated by type, and if compared with Q3-2008, it appears that in Q4-2008 non-residential and residential construction decreased in the oPt by 9.7 percent and 18.36 percent, respectively. It is worth noting that obtaining data for Gaza is not possible due to the closing of the PCBS office in Gaza.

Data on bank credit is used as a proxy indicator for economic progress (increasing use of bank credit, particularly in the main productive sectors) or decline (decreasing use of bank credit). The Palestine Monetary Authority provides adjusted data once every three months. In relative terms, general trade and Real Estate and Lands show an increase in the use of credit. Bank credit to the public sector also indicates an increase of approximately 6.2% in Q3-2008 when compared with Q2- 2008. (Please note the PMA has adjusted the indicators for bank credit by economic activities starting Q1-2008. Due to such significant changes, current trends cannot be compared to those prior to 2008.)

Disaggregating bank credit by the type of credit, the data shows an increase in both loans and bank overdrafts. Loans currently represent 61.4 percent of all credit extended compared to only 41% in the pre-Intifada period.

Disaggregating bank credit by borrowing entities shows that consumer lending has increased in the third quarter of 2008. Compared to pre-intifada levels, consumer borrowing has slightly decreased, by 5%.

Bank deposits for the third quarter in 2008 indicate an increase in both private and public sector deposits. Compared with the second quarter of 2008, total bank deposits in the third quarter of 2008 have increased by 4.66 percent.

In a functioning economy, an increase in the loans versus deposits ratio is perceived as a positive sign, as monies are not saved but invested or consumed, each of which is a stimulant for the economy. Since September 2006, this ratio has steadily declined in the oPt signaling little optimism
in the prospects for the Palestinian economy, which limits appetite for domestic investment and thus increases deposits. The sharp drop in the second and third quarters signals heightened concern with regard to overall economic performance.

Similar to bank credit and deposits, data on the Palestinian stock exchange is used as a proxy indicator of Palestinian perceptions vis-à-vis the state of the national economy. Data for January 2009 shows a decrease in trade at the stock exchange both in terms of value and number of stocks traded. The Al-Quds index increased by approximately 13.43% in January 2009.

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