The PMA issued the Economic Developments Report for the fourth quarter of 2013, covering the latest global, regional and domestic developments of economic indices for growth, prices, inflation, unemployment, interest rates, general finance and external sector as well as banking developments.
The report points to the increasing Palestinian economic slowdown during Q4 2013 with growth rate failing to exceed 0.3% when compared to the previous quarter. The report shows that the slowdown follows two disparate trends of growth for the West Bank and Gaza Strip. Whereas growth in the West Bank registered a modest rise of less than 1.2% on quarterly basis, growth in the Gaza Strip underwent economic contraction of around 2.3%, which adversely affected overall growth for the current quarter in Palestine. The slowdown was reflected on labour market indices. Unemployment rose to 25.2% which is higher than in the previous quarter and higher than in the corresponding quarter of the previous year 2012. Moreover, annual inflation rate rose to around 2% (3.6% in the West Bank and -8% in the Gaza Strip).
Within the scope of government finance, the current deficit fell by more than half compared with the corresponding quarter of 2012 due to a growth in revenues accompanied by a decrease in the level of current expenditure. Along the same lines and despite the fall in the value of foreign aid during the current quarter, the overall balance recorded a surplus for two consecutive quarters. Contrarily however, the fall of the volume of foreign aid has caused an increase in the deficit of the balance of payments current account by almost half compared to the previous quarter.
On a different note, the performance of the banking sector witnessed a clear improvement for the period under comparison which was reflected by a growth in assets/liabilities of banks operating in Palestine, an increase in credit facilities and deposits from the general public as well as an increase in bank equity. It is worth mentioning that direct credit facilities are still achieving larger growth rates than those achieved by GDP, which is indicative of the advancement of the indices of financial depth. Within the same context, the results of stress testing, which was performed by PMA on Q4 of 2013 quarterly financial statements of all banks operating in Palestine, confirm the robustness of the Palestinian banking sector in general.
The full published report can be found on PMA website www.pma.ps and accessed here.