Palestine Economy Grew in Q2

Real GDP in the occupied Palestinian territory in Q2/2016 was 1.7% higher than in Q1/2016, driven by a 4% growth in the West Bank. Real GDP in Gaza contracted by 4.8% during the same period, United Nations Special Coordinator for the Middle East Peace Process said on Friday.

Compared to Q2 2015, real GDP in the oPt grew by 3.9% driven by a 3.3% growth rate in the West Bank and a 5.8% growth rate in the Gaza strip, UNSCO Socio-Economic Report said.

 In Q2/2016 the Gaza economy constituted about 24% of the overall Palestinian economy, down from about a third in the previous quarter, and the Strip’s GDP per capita was 44% of the West Bank’s, compared with about half of the West Bank’s in the last quarter.

In the West Bank, between Q2/2015 and Q2/2016 there was significant expansion in real value added in financial and insurance activities (13.1%) and the transportation and storage sector (15.7%). There was significant contraction in real value added in agriculture, forestry and fishing (11.3%), construction (7.9%), and wholesale and retail trade (4.9%).

During the same period in the Gaza Strip, agriculture, forestry and fishing contracted by 25.6%, the construction sector by 11.0%, and the transportation and storage sector by 7%. The services sector grew by 17.4% and financial and insurance activities by 17.0%.

The services sector was the largest in the West Bank economy in Q2/2016, accounting for 18.7% of GDP. This was followed by the wholesale and retail trade sector (17.1%) and mining, manufacturing, electricity and water (15.3%).

Public administration and defense continued to be the largest employers of people in Gaza, also accounting for the largest proportion of the Gaza Strip’s GDP in Q2/2016, accounting for 30.9% of the total, followed by services (25.5%), and wholesale and retail trade (16.7%).

Final consumption in the West Bank was 114.5% of GDP in Q2/2016. Household final consumption constituted 91.9% of GDP while government consumption was 21.0% of GDP. Gross capital formation accounted for 27.9% of GDP, most of it gross fixed capital formation (25.9% of GDP).

Exports of goods and services from the West Bank made up 24.5% of GDP while imports represented 64.4%, resulting in a West Bank trade deficit of 39.9% of GDP in the quarter.

In the Gaza Strip, final consumption in Q2/2016 was 132.6% of GDP, household final consumption was 75.0% of GDP and government final consumption was 43.7% of GDP. Gross capital formation was 2.6% of GDP, and gross fixed capital formation, 16.1% of GDP. Exports from the Gaza Strip amounted to 3.2% of GDP while imports amounted to 35.3%, resulting in a trade deficit equal to 32.1% of GDP in Q2/2016.

The industrial production index increased from 101.75 in April to 107.94 in May 2016, but then fell to 102.82 in June (base year is 2015). Activity in mining and quarrying (with a share of 4.06% in the IPI) grew significantly in May and June but then contracted in July.

The manufacturing industry (with a share of 83.19% in the IPI) grew in April and May, but then contracted in June. Activity in the water supply, sewage, waste management and remediation activities sector (with a share of 0.78% in the IPI) contracted in April but recovered strongly in May. Activity in the electricity, gas, steam and air conditioning supply sector (with a share of 11.98% in the IPI) decreased in April and May but grew strongly in June 2016.