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Source: United Nations Special Coordinator for the Middle East Peace Process (UNSCO)
30 April 2008

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 For a more detailed report on sections C (Macro-economy) and D (Private sector), see data below.
2 CPI Base year = 100
3 MoNE data does not include aggregates or aid flows.
4 Adjusted unemployment is calculated by adding discouraged workers (i.e. unemployed but no longer seeking work) to the ILO standard.
5 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 exchange rate between the US dollar and the NIS dropped again in April, 2008. The declining dollar could benefit the Palestinian economy, as it could make imports cheaper.

Registered fuel sales in the Gaza Strip markedly dropped in April, if compared with March 2008. Although fuel prices have been increasing, Israeli imposed reduction in supplies and a slow down in internal distribution are seen as the main factors contributing to the drop.

The Palestinian CPI continued its steady increase in the month of April 2008. The CPI increased by 1.4% in the oPt, by 1.51% in the West Bank, and 1.7% in Gaza. During the month of April, food prices increased in the Gaza Strip by 5.6% reaching higher levels than those in Ramallah and in
Hebron where traditionally prices are higher.

Truck movement to Gaza has been restricted to the import of humanitarian supplies since 12 June 2007. Exports were suspended at the same time with only approximately 78 truckloads of strawberries and flowers grown with the support of the Netherlands exported in December.
Compared with March, April data indicates a decrease in the total of imported truckloads to the Gaza Strip, by approximately 33%. One of the reasons for this decline is that effective closure days in April were 43 day, while in March effective closure days were 18.5.

The negative consequences of the closure of the Gaza crossings for Israeli continued. The IsraeloPt trade balance - which had reached almost half a billion per quarter in the early part of 2007 – has dropped by 15 percent since the first quarter of 2007 - primarily as a result of declining imports from Israel into the oPt. A second notable finding is that despite the suspension of exports from Gaza, total oPt exports to Israel remained at the same level as during previous quarters indicating an increase in exports from the West Bank.

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

The number of new company registrations 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 slightly increased in April 2008, by approximately 3.53%. However, if compared to pre-Intifada levels new company registrations has dropped by approximately 50.65%. In Gaza, new company registrations remained at its all-time low of zero.

Similar to new company registrations, the area licensed for new construction is also used as a proxy indicator for economic vitality. If compared with March, areas licensed for new construction for the West Bank increased in April by 6.3%. However, if compared with pre-Intifada levels, areas licensed for new constructions have significantly dropped, by approximately 50.1%.

If disaggregated by type, and if compared with Q3-2007, it appears that in Q4-2007 non-residential construction significantly decreased in the oPt, by 70.6%, while residential construction slightly decreased by 1.41%.

Data on bank credit is used as a proxy indicator for perceptions of 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 monthly data once per every three months. The last six months of 2007 show a distinct decline in the use of bank credit, a trend that is particularly evident during Q4-2007 in the main productive sectors (manufacturing, construction, general trade). In contrast, the use of bank credit increased by over 32 percent in the financial services sector, most likely as a preventative effort by banks to stave off potential implications of severed relations with Israeli banks. Bank credit to the public sector has more than tripled if compared with the pre-Intifada period.

Disaggregating bank credit by the type of credit, confirms the relative stability of the banking sector. The ability of the PA to resume regular salary payments will have had some impact in the decrease of loans.

Disaggregating bank credit by the borrowing entity shows that consumer lending has declined significantly in the third quarter of 2007 and has continued to drop in the fourth quarter. The most likely reason for this development is the continued risk-adverse stance of Palestinian banks
combined with the recommencement of regular payment of PA salaries which has allowed a number of PA staff to pay off existing loans reducing the demand for credit.

Bank deposit data for the fourth quarter indicates a continued sizeable increase in private sector deposits (both in terms of public and private sector bank deposits). Compared with January 2007, bank deposits in December 2007 show an increase of 18.3 percent.

In an efficient economy, an increase in the loans versus deposits ratio is a positive sign as monies are not saved but invested or consumed, stimulating the economy. Between September 2006, and the end of December 2007, this ratio steadily declined by over 26 percent in the oPt signaling little optimism concerning the Palestinian economy which limits appetite for domestic investment and thus increases deposits. The sharp drop in the third and fourth quarter signals heightened concern with regard to overall economic performance, most likely due to the events in Gaza since June 2007.

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 April 2008 shows an increase in trade at the stock exchange both in terms of value and number of stocks
traded. The Al-Quds index has grown in April, by approximately 8.23%. It is worth noting that Al- Quds index has increased by 35.6% since the beginning of the year.

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