PMA Announces the Results of October PMABCI

Remarkable Increase in Gaza Strip and Less Improvement in the West Bank

The PMA has released the results of PMA Business Cycle indicator (PMABCI) for October 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 October 2013, the PMABCI increased to 0.61, compared with -2.81 in September, but with a diverse improvement in the West Bank (WB) and Gaza Strip (GS). While GS indicator remarkably increased from -3.23 in September to 6.34 in October, the increase in the WB was in a lesser pace (from -5.15 to -2.19) in the same period.

This minute improvement in the WB indicator came basically as a result of the improvement in furniture sub-sector that forms around 15 percent of the WB labor force, increasing from -3.25 in September to 2.44 in October. While the performance of the other sub-sectors was relatively as it was in the previous month. The following figure clarifies the apparent fluctuations in the WB indicator under the continuous political and economic uncertainty; Israel continues to impose constraints on access and movement, political schism between the WB and GS is standing, in addition to the lack of clarity regarding resuming the Palestinian-Israeli negotiation. From the other side, and although the threatens of waging a war on Syria has declined, the political unrest in the region and its possible repercussions on Palestine is still standing

In GS, the indicator has witnessed a remarkable improvement during October. In spite the decline in food industry that forms around one third of Gazan total industry, the improvements in other sub-sectors (construction, paper industry, chemical and Pharmaceutical industry, and engineering industry) have improved the whole industry performance. While on the other hand, the performance of the remaining sub-sectors have varied between stable or decline during the same period. It is worth to mention that GS still faces the same political conditions with tiny changes betweenwhiles; the Israeli Siege and political schism is still dominant, in addition to the political unrest in Egypt 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, October, 2013.