PMA Announces the Results of September PMABCI: Remarkable Decline in the West Bank and Minute Improvement in Gaza Strip

The PMA has released the results of PMA Business Cycle indicator (PMABCI) for September 2013. The PMABCI is a monthly index which aims to capture the state and evolution of the Palestinian business environment, reflecting fluctuations in production and economic activity overtime. The construction of the indicator is based on qualitative data obtained from monthly business surveys of a representative sample of industrial institutions' owners/ mangers on the value of various leading indicators during a specified period, and their expectations for the coming months. After that, the data is processed to construct a quantitative PMABCI.

During September 2013, the PMABCI witnessed further decline where it decreased from -3.88 during August to -6.47 as a result of enormous  decrease in the West Bank (WB) indicator from 4.65 during August to -5.15 during September, compared with a minute improvement in Gaza Strip (GS) indicator from -7.15 to -8.32, in the same period.

The decline in the WB comes mainly as a result of a decline in the indicator in both textile and furniture sector, which form together more than one third of the WB industry. Textile sector indicator declined from 5.03 to 2.52, while furniture sector indicator decreased from 1.63 to -3.25 during the period of comparison.

The following figure clarifies the apparent fluctuations in the WB indicator under the continuous political and economic uncertainty; on one side, Israel continues to impose constraints on access and movement, and on the other side, political schism between the WB and GS is continues, in addition to the lack of clarity regarding resuming the Palestinian-Israeli negotiation. Also, the concerns of waging a war on Syria and its possible repercussions on Palestine influence the economic conditions in the WB.

On the other hand, GS indicator has witnessed a minute improvement during September, reflecting the steadiness of most sub-industrial sectors without any significant changes. Steadiness is a sign of stability in the economic conditions in the specified period reflecting the steadiness of the  influencing economic and political factors. In GS, the same political conditions related to the Israeli siege and political schism are still dominant; in addition there was the recent political unrest in Egypt, especially in the last two months, and its influences  on Gazan economy through affecting the free mobility of individuals and goods both ways.

It is important to notice that the maximum value of this indicator is positive 100, while the minimum is minus 100; a positive value indicates favorable economic performance, and the bigger this value, the better the economy is. But if the value is negative, then economic performance is worsening the closer it gets to minus 100. On the other hand, a value close to zero indicates that economic performance did not change and is unlikely to do so in the near future.

Source: PMA (2013). PMABCI, September, 2013.