Palestine Monetary Authority publishes 3rdQuarter Economic Developments Report 2016, which addresses local, regional, and global economic developments. The Report shows annual acceleration in the growth of the Palestinian economy at 5.2% in the 3rdquarter compared to 3.5% in the previous quarter. The developments show acceleration in growth in the West Bank to 3.9% compared to 3.1% last quarter. This is due to boom in several economic sectors especially transport, warehousing, industry, trade, and services. GDP also grew in Gaza Strip by 9.7% -on annual basis- compared to 5.1% in the previous quarter. This is in light of boom in construction as a result of allowing entry of building material into Gaza Strip and better performance for industry, financial services, and public administration.
However, unemployment rate rose to register 28.4% compared to 26.9% in the 2ndquarter of 2016. The unemployment rate of the West Bank rose to 19.6% from 18.3% and it rose from 41.7% to 43.2% in Gaza Strip during the same period. Price levels registered relative stability in the 3rdquarter in 2016; this is against the backdrop of changes in the prices of basic commodities. The consumer price growth rate in Palestine did not exceed 0.04% -on annual basis- compared to a 0.2% deflation in the previous quarter. This rate showed prices’ trends that went in opposite directions in the West Bank and Gaza Strip where price levels increased by approximately 0.3% in the West Bank and deflated by 0.9% in the previous quarter in the West Bank compared to price deflation of 1.0% in the 3rdquarter and 0.1% growth in the previous quarter in Gaza Strip.
The drop in clearance transfers had unfavorable impact on government finance items compared to previous periods; this led to accumulation of deficits in the current and overall balance before and after aid. Net public revenues and grants dropped by 16.7% -on annual basis- at the end of the 3rdquarter of 2016 due to drop in clearance revenues in comparison to the unusual level in the 3rdquarter of 2015. Alternatively, domestic revenues rose by 35.4% and external aid increased by 17.3%. Public expenditure dropped by approximately 4.1% during the same period as a result of a 5.9% drop in wage expenditure and a 9.0% drop in non-wage expenditure; especially transfer expenditure. On the whole, overall balance after aid registered a deficit of NIS 63.3 million in the 3rdquarter of 2016.
The Palestinian banking sector continued to rapidly grow in the 3rdquarter of 2016 after a short-lived slowdown in the previous quarter. The assets/ liabilities of the banks that operated in Palestine rose by approximately 13.1% -on annual basis- in comparison with 9.8% in the previous quarter to register $13.7 billion. The developments occurred against the backdrop of growth in most assets; especially credit facilities, which grew by 23.2% -on annual basis- to reach $6.7 billion. ON the other hand, on liabilities side, clients’ deposits rapidly grew to hit 9.7% -on annual basis- in the 3rdquarter of 2016 compared to 7.9% in the previous quarter to hit $10.4 billion.