SOCIO-ECONOMIC REPORT - FEBRUARY 2011
The purpose of the present report is to: 1) broaden the access to the information contained in the 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 six sections, as follows:
Section I. consists of a one-page fact sheet that provides a snapshot view of the socio-economic situation for the current and previous reporting periods.
Sections II. and III. report on the macro-economic and fiscal situation, and sections IV. and V. give an overview of developments in the banking and private sectors, respectively. Section VI. is dedicated to issues on Gaza.
Two annexes provide detailed reference information. Annex A presents detailed statistical reference tables, and Annex B lists the main socio-economic terms used in this report along with their corresponding definitions.
Topics of current interest are analyzed in-depth in periodic “Supplements”.
Most sections provide data on the six preceding reporting periods for each indicator and, for comparison purposes, data for a reference period immediately before the Al-Aqsa intifada, which started in September 2000, or the closest time period available.
Note: The data for the West Bank and oPt in this report do not include occupied East Jerusalem unless otherwise specified.
II. MACRO-ECONOMIC SITUATION
In spite of its decreasing relative size over time, agriculture and fishing was the most dynamic sector in Q4/2010, expanding its gross value added by 36%. Construction saw the biggest decline in Q4/2010, 6%.
The Consumer Price Index (CPI), used to measure inflation, reflects an increase of 0.4% in prices in February 2011 compared to the previous month, but an inflation rate of 3.6% in the year since February 2010. Year-on-year inflation was highest in East Jerusalem (4.9%), followed by the West Bank (3.9%). The greatest price rises were felt in the following sectors: food and soft drinks, restaurants, cafes and hotels. The biggest drops were in miscellaneous goods and services and medical care.
In East Jerusalem the CPI also rose slightly, pushed primarily by a rise in the cost of furniture and household goods, followed by restaurants and cafes. The price of miscellaneous goods and services saw the biggest decline, followed by the cost of medical care.
II.c Exchange rates
Both the NIS and the JOD fell against the euro in February 2011. The NIS also fell against the US dollar, while the JOD’s exchange rate to the US dollar is constant at 0.71.
Source: PCBS, Labor Force Surveys.
Note: The totals may not be exactly equal to the sum of percentages due to rounding.
Regional differences are marked, with the rate in Gaza (37.4%) about double the rate in the West Bank (16.9%). The highest unemployment rates in the West Bank are observed in Bethlehem (22.4%) and Hebron (22.3%). In the case of Gaza, the highest rates are found in Khan Yunis (50.6%) and Rafah (40.7%).
In fact, all governorates in the Gaza Strip have employment rates below 65%. Employment in the governorates in the north and south of the West Bank is between 65% and 80% of the labor force. Only those governorates in the central area of the West Bank employ more than 80% of their labor force.
The distribution of employment by sector also reveals interesting intra-governorate differences. In particular, it is observed that the private sector is a more important employer than the public sector in the West Bank, but a different situation is observed in the Gaza Strip. In Deir Al-Balah governorate, for example, 63% of workers are employed in the public sector, followed by Rafah with 59%.
Thirteen percent of Palestinians in oPt aged 15 to 59 years express the desire to emigrate. Of these, 39% wish to do so to improve living conditions and 15% due to lack of job opportunities. In the Gaza Strip, 14% of those wishing to emigrate are motivated by the lack of security.
Source: PCBS, Migration Survey in the Palestinian Territory, 2010.
IV. BANKING SECTOR
Distribution of Bank Credit by Type (%)
(Bank credit by type in million US$)
Note: The totals may not be exactly equal to the sum of percentages due to rounding. Total Bankers' acceptances and discounted bills Loans Overdrafts Leasing
Q4/2010 saw an increase of close to 3% in total bank deposits. Deposits stem mainly from the private sector (90% of total deposits), particularly from residents (87%). The proportion corresponding to non-residents declined by almost 30% in Q4, following a sharp fall of 44% in Q3/2010. The proportion of public sector deposits in total deposits doubled to 10% between Q2/2000 and Q4/2010. Similarly, the proportion of government deposits in total public sector deposits has grown notably over time.
The amount of loans relative to deposits gives an idea of the liquidity of the banking system. In a functioning economy, a relative increase in loans versus deposits (within limits) can be perceived as a positive sign, as monies are not saved but invested or consumed, which in turn stimulates the economy. In oPt, the loan-to-deposit ratio decreased in Q4/2010 as deposits grew faster than loans. (See further details in Table A7. in Annex A.)
V. PRIVATE SECTOR
Area Licensed for New Construction
Source: Engineering Offices and Consulting Firms.
Data on the Palestinian stock exchange are used as a proxy of Palestinian perceptions vis-à-vis the state of the national economy. Data for February 2111 show a decrease of approximately 14% in the number of stocks traded and a small decrease of 1% in the value of shares traded. The Al-Quds index fell by 1% in February.
VI. GAZA STRIP
Source: General Petroleum Corporation. Kerem Shalom
Note: On 1 January 2010, Israel declared Nahal Oz fuel pipelines closed, with fuel being transferred to Gaza only via Kerem Shalom.
Following the June 2010 decision to ease the closure of Gaza, monthly import levels have fluctuated between roughly 3,900 and 5,200 truckloads. On average, imports have grown by 6% per month since June 2010, which has not been enough to bring total imports to the level observed before the closure was tightened in 2007. In February 2011 imports were only about 85% of the May 2007 level and only 50% of the August 2000 level.
ANNEX B: Terms and Definitions
Al-Quds index - This is the primary stock index of the Palestine Securities Exchange (PSE).
Area licensed for new construction - This is the area licensed for construction in new and existing buildings.
Average daily net wage - This average is calculated as the total net wages paid to all employees divided by total workdays. Wages received in different currencies are converted into New Israeli Shekels according to the exchange rate in the survey month.
Bank credit - It measures the borrowing capacity provided to individuals, firms and organizations by the banking system in the form of loans or other types of credit. Credit is generally believed to contribute to economic growth.
Bank deposits - Deposits are accounts maintained by a bank on behalf of customers. This indicator is often used to measure the safety of and people’s trust in the banking system.
Consumer Price Index (CPI) - The CPI is a statistical tool used to measure changes over time in the prices paid by households for a basket of goods and services that they customarily purchase for consumption. The CPI is used to measure inflation over time. The main categories of goods and services included in the basket of goods are: fruits, vegetables and other food items, beverages, tobacco, textiles, clothing, footwear, furniture, household appliances, household utensils, fuel, power, transportation, communications, medical and pharmaceutical products, goods for personal care, services charges for public transport, communication, hospital care, and others, and school fees. Data on prices for consumers are collected through visits conducted by trained staff to selected markets including groceries, supermarkets, markets, restaurants, general services offices, hospitals, private schools, etc.
Effective/partial closure days - Effective closure days are calculated by adding all days when a crossing is fully or partially closed, excluding weekends and holidays. Partial closure means that the crossing is closed for more than one hour but not for a full day, in which case it would be considered fully closed. Weekends and holidays include all Saturdays, half the Fridays (since labor and commercial flows are about half their normal workday level on Fridays) and universally celebrated Jewish and Muslim holidays. Jewish and Muslim holidays which fall on Saturday or Friday are not counted as a holiday but as a Saturday (full day closure) or Friday (half day closure), respectively.
Employed - The “employed” comprise all persons are 15 years or over who were working at a paid job or business for at least one hour during the week prior to the survey, or who did not work but held a job or owned business from which they were temporarily absent (because of illness, vacation, temporarily stoppage, or any other reason) during the reference week.
Exchange rate -The price of one currency stated in terms of another currency is the exchange rate.
Exports - Exports are any good or commodity, shipped or otherwise transported out of the territory to another part of the world, typically for use in trade or sale. Export products or services are provided to foreign consumers by domestic producers.
Gross Domestic Product (GDP) - GDP is the total value of all goods and services produced within oPt in a given period of time. When GDP is expressed in constant terms (real GDP), a deflator is used to adjust for changes in money-value. Quarterly data are annualized by multiplying by 4.
GDP per capita - This is the result of the division of GDP by total population.
GDP rate of change - The rate of change is the percentage change (increase or decrease) of GDP from the previous measurement cycle.
Inflation rate -The inflation rate is the percentage change in the price index over time.
Government total net revenue - It measures the net inflows received by the government, including clearance revenue, tax refunds, and tax and non-tax revenue collected by the Ministry of Finance and other ministries for the consolidated Single Treasury Account (STA).
Government wage expenditure - This is the government’s outlay on the wages and salaries of permanent civilian and security employees.
Government non-wage expenditure - This is the part of government expenditure absorbed by operational expenditures, transfers and minor development and capital expenditures.
Government net lending - This term includes transfers to local government to cover clearance revenue, deductions by the Government of Israel for water and electricity, and services by the Ministry of Health and the Ministry of Agriculture.
Government balance - The government balance is the difference between the government’s total net revenue and its expenditures, including wage and non-wage expenditures, net lending and development expenditures.
External budget support - It consists of transfers of resources by donor countries to the Palestinian National Authority to help finance its budget.
Imports - Imports are the goods and services that are produced by the foreign sector and are purchased by the domestic economy.
Labor force - The labor force consists of all persons of working age (15 years or over) who are either employed or unemployed during a specified reference period. Excluded from the labor force are those of working age who are neither working nor searching for work. These could be students, retired persons, those in prison, and homemakers. Loan-to-deposit ratio - This ratio gives the amount of banks’ loans divided by the amount of their deposits. The statistic is often used to assess the banking system’s liquidity. If the ratio is too high it may imply that banks could not have enough liquidity to cover any unforeseen fund requirements. Conversely, if the ratio is too low banks may not be lending and earning as much as they could be.
Number of new company registrations - This is the number of new companies that register with the Ministry of National Economy to conduct business operations in oPt.
Number of shares traded - It is the amount of shares that trade hands from sellers to buyers in the market over a given period.
Underemployment - Underemployment exists when a person’s employment is inadequate in relation to specified norms or alternative employment. Time-related underemployment applies to those who involuntarily work less than the normal duration of work determined for the activity and who seek or are available for additional work during the reference week.
Unemployment rate - The "unemployed" comprise all persons aged 15 or over who, during the week before the survey, were without work, available for work and seeking work. The unemployment rate expresses the number of unemployed as a percentage of the total labor force. The indicator is widely used as a measure of unutilized labor supply.
Value of shares traded -The value of shares traded is the sum of the shares traded multiplied by their respective matching price.