Real quarterly GDP in Q3/2014 was lower than in Q2/2014 and Q3/2013. Year-on-year growth was registered only in the West Bank, however, as the economy in the Gaza Strip contracted by 31.8%. In Q3/2014 the Gaza economy constituted only 20% of the overall Palestinian economy, and the Strip's nominal GDP per capita was less than half the West Bank's.
Between Q3/2013 and Q3/2014 there was a significant expansion in real value added in services (13.5%), followed by financial and insurance activities (8.7%) and the wholesale and retail trade sector in the West Bank (5%). Decreases in real value added were registered in the mining, manufacturing, electricity and water sector (9.7%), as well as the information and communication sector (7.9%), and transportation and storage (9.7%).
During the same period, in the Gaza Strip significant contractions were registered across all sectors with the exception of public administration and defense, notably in the construction sector (-89.8%%), transportation and storage (-79.4%) as well as agriculture, forestry and fishing (77.5%).
The services sector constituted the largest one in the West Bank economy in Q3/2014, accounting for 19.3% of GDP. This sector was followed by wholesale and retail trade (17.6%) and mining, manufacturing, electricity and water (16.4%).
In the case of the Gaza Strip, public administration and defense represented the largest proportion of GDP in Q3/2014, accounting for 41.5% of the total, followed by services (29%) and wholesale and retail trade (9%). The construction sector, which accounted for 10.5% of Gazan GDP in Q3/2013, saw its share reduced to 1.9% by Q3/2014.
Final consumption in the West Bank represented 117.2% of GDP in Q3/2014. Household final consumption reached 89.3% of GDP while government final consumption was 25.5% of GDP. The value of exports of goods and services from the West Bank grew by 13.5% between Q3/2013 and Q3/2014 while that of imports only grew by 1.7%. Still, the West Bank trade deficit represented 40% of GDP in the quarter.
In the Gaza Strip, final consumption in Q3/2014 was equivalent to 182.7% of GDP, 101.7% of it household final consumption and 64.3% of it government final consumption. Gross capital formation was negative during the quarter, representing -33.9% of GDP. Gross fixed capital formation has seen a dramatic year-on-year decline Q3/2013, shrinking by 90.9% in the year to Q3/2014. Between the third quarters of 2013 and 2014 the value of exports of goods and services from the Gaza Strip declined by 45.4%, while there was a large increase (27%) in imports, resulting in a trade deficit equivalent to 52.4% of GDP in Q3/2014.
The industrial production index (IPI) increased to 115.76 by September 2014 (base year is 2011). Activity in manufacturing (with a share of 80.56% in the IPI) declined in July but increased in August and September. Activity in the water and electricity supply sector (with a share of 14.85% in the IPI) decreased in July and August and remained flat in September. Activity in the mining and quarrying sector (with a share of 4.59% in the IPI) increased in July and September but decreased in August.
The business cycle index reflected a contraction in the West Bank and Gaza Strip throughout the quarter. Most notably, the index declined most severely in the Gaza Strip in July (-26.22) and August (-78.1).