OPT socio-economic report (September 2010) – UNSCO

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 (oPt), are relatively abundant. However, the data that are available tend to remain dispersed and are not always automatically shared between institutions. The objective of the database is to bring together in one place a wide variety of data on socioeconomic conditions and by doing so present a broader, more detailed perspective on socioeconomic 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 four sections:

Section 1 consists of a one-page fact sheet which provides a snapshot view of the socio-economic situation for the current and previous reporting periods and it provides, for reference purposes, baseline figures for the period just prior to the outbreak of the second Intifada.

Sections 2 and 3 report on the macro-economic situation and economic activity throughout the oPt, including private sector and banking activity. Section 4 focuses on access of goods in and out of the Gaza strip. All sections provide data on the last six reporting periods for each indicator as well as baseline data, which are pre Al-Aqsa intifada. In addition, a summary analysis on observed trends is presented below each table.

For further information please contact:

Gaza Strip: Raed Raqeb raqeb@un.org

The Palestinian CPI reached 130.68 in September 2010, an increase of 1.39% compared to August 2010. Increases were recorded in the Food and soft drinks sector (3.09%), in Miscellaneous goods and services (0.74%) Textiles, clothing and footwear (0.09%) and Medical care (0.51%), while the Transportation sector experienced a 0.32% price decline.

¹¹ Adjusted unemployment is the total number of unemployed in addition to those who are unemployed and do not seek any employment.

The data indicate that the percentage of unemployed increased from 22.0% in the 1st quarter 2010 to 22.9% in the 2nd quarter of 2010, (compared with 22.2% in the 2nd quarter of 2009). The unemployment rate increased in Gaza Strip from 33.9% in the 1st quarter 2010 to 39.3% in the 2nd quarter of 2010, while in the West Bank it decreased from 16.5% in the 1st quarter 2010 to 15.5% in the 2nd quarter of 2010.

The Tulkarm governorate has the highest unemployment rate among the West Bank governorates (21.3%) followed by the Qalqilia governorate at 19.0%, while the Jerusalem governorate has the lowest unemployment rate (9.7%). For the Gaza Strip, the Deir AlBalah governorate has the highest unemployment rate (43.3%) followed by the North Gaza governorate (41.1%), then Khan Younis governorate (40.7%).

The exchange rate between the US dollar and the NIS declined by approximately 1.58% in September 2010 compared to August 2010.

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 local economy to create new employment. New company registrations in the West Bank declined by 16.98% compared to August 2010. When compared to pre-Intifada levels, new company registrations have declined by approximately 35.77%. For Gaza, data from the local Ministry of Economy indicate 32 new registered companies in September 2010. On such basis, the number of newly registered companies in Gaza shows a decline of approximately 28.89% compared to August 2010.

[CHART – Number of new company registration in the last three months – please see document in PDF format]

Similar to bank credit and deposits, data on the Palestinian stock exchange are used as a proxy indicator of Palestinian perceptions vis-à-vis the state of the national economy. Data for September 2010 show an increase in terms of the number of stocks traded of approximately 18.95% and an increase in terms of value of shares traded of approximately 61.18%. The Al-Quds index increased by 2.42%.

[CHART – Number of registered companies and number of traded shares – please see document in PDF format]

Similar to new company registrations, the area licensed for new construction is also used as a proxy indicator for economic vitality. September 2010 data show a decline in the area licensed for new construction of approximately 41.70% compared to the previous month in the West Bank. When compared to pre intifada levels, the area licensed for new construction has now experienced a decline of 50.10%.

Data on bank credit is another proxy indicator for economic progress and business confidence (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, the data show an increase in the use of credit. Bank credit to the public sector indicates a decline of approximately 5.20% in Q2-2010 when compared with Q1-2010. (Please note the PMA has adjusted the indicators for bank credit by economic activities starting Q3-2008. Due to such significant changes in the methodology, current trends cannot be compared to those prior to 2008.)

Disaggregating bank credit by the type of credit, the data show an increase in loans and overdrafts. Loans currently represent 72.5% of all credit extended compared to only 41% in the pre-Intifada period.

Disaggregating bank credit by borrowing entity shows that consumer lending has experienced decline of approximately 5.20% in Q2 -2010 compared to Q1-2010.

Bank deposits for the Q2- 2010 indicate a decline in public sector deposits of approximately 2.15% and a decline in private sector deposits of 1.67% compared with Q1- 2010.

In a functioning economy, an increase in the loans versus deposits ratio is perceived as a positive sign, as monies are not saved but invested or consumed, each of which acts as a stimulant for the economy. Since September 2006, this ratio had steadily declined in the oPt signaling little optimism in the prospects for the Palestinian economy. However, Q2-2010 indicates an increase in total loans of approximately 2.77%, and a decline in total deposits of 3.60% compared with Q1- 2010.

There was a significant decline in the amount of imported cooking gas, with 2,902 tons allowed in through Kerem Shalom, which represents an 15.96% decline compared to the volume allowed in August 2010). During the reporting period, 31,000 liters of petrol were imported for UNRWA.  On 1 January 2010, Israel declared Nahal Oz fuel pipelines closed, with fuel being transferred to Gaza only via Kerem Shalom.

[CHART – Cooking gas supply via Gaza crossing – please see document in PDF format]

September 2010 data indicate a decline in the total number of imported truckloads to the Gaza Strip by approximately 30%, compared to August 2010 (3,614 vs. 5,176). Karni crossing has remained closed since 12 June 2007 for the movement of goods in and out of Gaza. The single conveyor belt/chute for cereals and animal feed at Karni was open for a total of 7 days. Four hundred and sixty-one truckloads of animal feed (56.6%), and wheat (43.4%) entered Gaza via the conveyor belt. Of the 3,029 truckloads entering Gaza during the month through Karem Shalom (Karm Abu Salem), 317 (or 10.47%) were designated for humanitarian aid agencies and the remaining 2,712 (or 89.53%) were for the private sector. Food items made up the majority of imported goods (1,464 truckloads, or 48%) while 1,565 truckloads, or 52%, were for non food items.

[CHART – Truckload movement into Gaza via crossings in the last three months – please see document in PDF format]