Palestine
Country Facts
Federation of Euro-Asian Stock Exchanges
The Palestine Central Bureau of statistics (PCBS) forecasts a slowdown in the performance of the Palestinian economy in 2018. Real economic growth is expected to slow down (according to the baseline scenario) to 2.6 percent compared to 3.2 percent in 2017. This slowdown is expected to affect real per capita income (real GDP per capita) which will decrease by 0.2 percent compared to an increase by 0.1 percent in 2017.
It is noted that these forecasts were based on a set of assumptions and included an analysis of the different risks that could occur but to varying degrees. This performance is based on the assumption that the economic and political situation in Palestine will remain the same as it was during 2017. It assumes that donor countries will continue to provide financial support for the budget of the State of Palestine (Central Government). It assumes the continuation of transfer clearance revenues from Israeli Occupation and improved tax collection efficiency, an increase of government transfers, and rise in the value of the credit facilities. It assumes that obstacles placed by Israeli Occupation on the movement of people and goods inside Palestine, between regions, or with neighboring countries, will be the same as in 2017, in addition to natural population growth in Palestine.
Moreover, according to these forecasts, the unemployment rate is expected to reach 28.7 percent in 2018. The value of government revenues is anticipated to increase by 8.5 percent as a result of improvements in tax collection, and government expenses will increase by 3.4 percent.
Based on this scenario, an increase of 7.4 percent is anticipated in the net current account deficit value and an increase of 4.5 percent in the trade balance deficit value. This is attributed to the expected rise in the value of Palestinian imports by 4.8 percent, despite of the expected increase in value of Palestinian exports by 5.6 percent; the value of net factor income is expected to increase by 7.2 percent. And value of gross national income and gross national disposable income will increase by 3.2 percent, 2.6 percent respectively.
Investment is also expected to increase by 6.8 percent and its contribution to the GDP will slightly grow to 21.7 percent. It is imperative to take into consideration the sensitivity of these results to any change in the actual official figures issued by the Central Statistics Department and the Palestinian Ministry of Finance.
Furthermore, a risk analysis indicates that these forecasts remain subject to various potential shocks. With the assumption that the economy will experience a positive shock in 2018 (an optimistic scenario).This scenario is based on the assumption that the political and economic situation will improve due to the positive effects of Palestinian reconciliation, as well as an increase in the development expenditures, necessary for the reconstruction of the Gaza Strip, and assistance provided by donor countries to finance the budget of the State of Palestine (Central Government).
It also assumes uninterrupted transfer of clearance revenues, and increase in tax revenues: with more collection of domestic value-added tax, and clearance value added, income, customs and excise, property and fuels (which is expected to rise because of an increase of fuel bill required to operate the Electricity company in the Gaza Strip), in addition to increasing the collection of non-tax revenues from fees on health services and education, and improved tax collection, prices may decrease due to the removal of restrictions imposed on the Gaza Strip then increase in the demand which followed by increasing in supply which affect to increase the employment and decrease the
Palestine Economy 2017
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Economic Outlook 2018
The performance of the Palestinian economy continues to fluctuate due to the political and economic circumstances and challenges. Uncertainty and political stalemate continue to prevail as the negotiations process is stagnant. The challenges also included reliance by the Palestinian economy on foreign aid and grants which continue to dwindle, a multi-currency financial system affected by the monetary policies of countries issuing these currencies and by global prices of commodities, especially oil and food.
Despite the difficulties the Palestinian economy faced in 2017, it succeeded in accelerating its performance by 3.2 percent thanks to the construction and industrial sectors. This improvement was accompanied by a slight increase 0.25 percent in consumer prices. On another side, unemployment rates increased and reached 28.5 percent as the labor market failed to create sufficient new job opportunities to accommodate the new labor joining the market. Both exports & imports increased by 4.2 percent & 2.8 percent respectively.