Real quarterly GDP in Q2/2014 was higher than in both Q1/2014 and Q2/2013. Year-on-year growth was registered only in the West Bank however, as the economy in the Gaza Strip contracted by 7.1%. In Q2/2014 the Gaza economy constituted only 24.4% of the overall economy, and the Strip’s nominal GDP per capita was less than half the West Bank’s.
Between Q2/2013 and Q2/2014 there was a significant expansion in real value added in the wholesale and retail trade sector in the West Bank (24.1%), followed by services (14.1%) and construction (12.3%).
Decreases in real value added were registered in the mining, manufacturing, electricity and water sector (13.1%), as well as the information and communication sector, and transportation and storage.
During the same period, in the Gaza Strip the public administration and defense sector reported the largest expansion (13.3%), while significant contractions were registered in the construction sector (72.9%), and transportation and storage (47.6%).
The wholesale and retail trade sector remained the largest in the West Bank economy in Q2/2014, accounting for 20.9% of GDP. This sector was followed by services (18.0%) and mining, manufacturing, electricity and water (15.0%). In the case of the Gaza Strip, public administration and defense represented the largest proportion of GDP in Q2/2014, accounting for 29.2% of the total, followed by services (26.6%) and wholesale and retail trade (14.0%). The construction sector, which accounted for 18.3% of Gazan GDP in Q2/2013, saw its share reduced to 5.3% by Q2/2014.
Final consumption in the West Bank represented 110.4% of GDP in Q2/2014, and 75.6% of it was in the form of household final consumption while 21.8% of the total was government final consumption. Gross capital formation in the West Bank grew by almost 10% between Q2/2013 and Q2/2014, and was equivalent to 29.9% of GDP in Q2/2014.
Ninety-two percent of it was gross fixed capital formation. The value of exports of goods and services from the West Bank grew between Q2/2013 and Q2/2014 while that of imports decreased. Still, the West Bank trade deficit represented 38.8% of GDP in the quarter.
In the Gaza Strip, final consumption in Q2/2014 was equivalent to 148.3% of GDP, 64.8% of it household final consumption and 30.5% of it government final consumption. Gross capital formation was negative during the quarter, representing -9.3% of GDP, due to reductions in inventories. Gross fixed capital formation has been on the decline since Q2/2013, shrinking by 76.4% in the year to Q2/2014. Between the second quarters of 2013 and 2014 the value of exports of goods and services from the Gaza Strip was almost unchanged, while there was a large increase in imports, resulting in a trade deficit equivalent to 41.6% of GDP in Q2/2014.
The industrial production index (IPI) increased to 112.79 by June 2014 (base year is 2011). Activity in manufacturing (with a share of 80.56% in the IPI) increased in April and May but decreased in June. Activity in the water and electricity supply sector (with a share of 14.85% in the IPI) decreased in April and June but increased in May. Activity in the mining and quarrying sector (with a share of 4.59% in the IPI) increased in April and June but decreased in May.
The business cycle index reflected improvements in the West Bank in April and particularly in June but it reflected a contraction in the West Bank in May. On the contrary, in the Gaza Strip the business cycle index reflected significant contractions in all three months.