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Source: United Nations Special Coordinator for the Middle East Peace Process (UNSCO)
31 August 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 2004 = 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 has increased in August, 2008 which could possibly increase the cost of imports to the oPt.

All fuel categories, with the exception of White Gasoline, experienced an increase in registered fuel sales during August, 2008. It is worth noting that the volume of registered fuel sales in the Gaza Strip has been on the rise since May, 2008 with 61.23% increase occurring in August, if compared to May.

The Palestinian CPI figures for August 2008 show a .40 % increase from July 2008 for the oPt. Since the beginning of the year, the CPI has risen by 4.6% in the West Bank, and 8.4% in the Gaza Strip. If compared to August 2007 the CPI increased by 13.2% in the Gaza Strip and 9.66% in the
West Bank. The worldwide phenomena in the increase of prices together with the closure of Gaza crossings are major factors for the increase in the CPI for Gaza.

Truck movement to Gaza has been restricted to the import of limited 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 2007. Compared with July 2008, August data indicates a decline in the total of imported truckloads to the Gaza Strip, by approximately 29.1% Of the 1588 trucks imported through Karni, 757 trucks are gravel, 109 cement, and 722 trucks of Beans,wheat and animal feed.

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 loca economy to create new employment. New company registrations in the West Bank slightly increased in August 2008, by approximately 4.46%.
However, if compared to pre-Intifada levels new company registrations have dropped by approximately 51.09%. As for Gaza, figures for 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 17 new registered companies for the month of August.

Similar to new company registrations, the area licensed for new construction is also used as a proxy indicator for economic vitality. If compared with July 2008, areas licensed for new construction for the West Bank decreased in August by 17.6%. However, if compared with pre-Intifada levels, areas licensed for new constructions have dropped by approximately 46.7%. As for the Gaza Strip, areas licensed for new construction have dropped by 8.68 % in August. It is worth noting that area licensed for new construction sizably increased in July due to the fact that municipalities in Gaza have lowered the fee for area licensing by 50%.

If disaggregated by type, and if compared with Q1-2008, it appears that in Q2-2008 non-residential construction decreased in the oPt by approximately 26%, and residential construction decreased by 34.9%. It is important to note that data for Gaza, according to the PCBS, is based on estimates.

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 data once every three months. In relative terms, general trade, transportation and public services show an increase in its use of credit, while financial sector services and real estate show a decline in its use of bank credit. (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, confirms the relative stability of the banking sector. Loans have slightly increased, while overdrafts have declined by 4.27%.

Disaggregating bank credit by the borrowing entity shows that consumer lending increased in the second quarter of 2008 by 2% in comparison to the first quarter of 2008. When compared to second quarter 2007, consumer lending decreased by 28.5% in Q2-2008.

Bank deposit data for the second quarter in 2008 indicates an increase in private sector deposits, and a decrease in public sector deposits. Compared with the first quarter of 2008, total bank deposits in the second quarter of 2008 showed an increase of 3.07 percent. The increase is due to the increase in private sector deposits.

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 January 2008, this ratio steadily declined in the oPt, while in second quarter of 2008, the ratio increased by 2%, possibly signaling optimism concerning the Palestinian economy, thereby increasing appetite for domestic investment, and thus deposits.

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 August 2008 shows a decrease in trade at the stock exchange in terms of value and an increase in terms of number of stocks traded. Although the Al-Quds index declined in August, by approximately 5.24%, it has been fluctuating since the beginning of the 2008, possibly mirroring fluctuating Palestinian perceptions vis-à-vis the state of the national economy this year.

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