Economic Monitor -66 - Second Quarter 2021

The Second Quarter of 2021 in Brief

• Gross Domestic Product: In Q2 2021, GDP at constant prices grew by 3.5% (2015 base year) compared with Q1 2021, reaching about $3.7 billion. This represented a growth rate of 4.3% in the West Bank and a decline of 0.3% in the Gaza Strip. There was a 2.8% increase in the per capita share of GDP (an increase of 3.7% in the West Bank and a decrease of 1.0% in the Gaza Strip). Per capita GDP reached $758.90 ($1,099.80 in the West Bank and $300.80 in the Gaza Strip).

• Employment and Unemployment: The unemployment rate in Palestine decreased by 1.4% between Q2 2021 and Q1 2021, reaching 26.4% (16.9% in the West Bank and 44.7% in the Gaza Strip). The average daily wage in Palestine was NIS 137.80, representing NIS 124.70 for workers in the West Bank, NIS 59.60 for workers in the Gaza Strip and NIS 264.80 for workers in Israel and the settlements. 29% of employees in the private sector received wages less than the minimum wage, with NIS 744.00 as the average wage.

• Public Finance: Net public revenues and grants increased to NIS 3.6 billion during Q2 2021, compared to about NIS 3.4 billion during Q1. On the other hand, public expenditures rose by 62.1% during the same period, to reach about NIS 3.7 billion. Events had an impact on both public revenues and public expenditures, leading to a deficit in the overall balance of about NIS 64.5 million after accounting for grants and foreign aid. The arrears owed by the government during this quarter amounted to about NIS 846.6 million. The government’s public debt, denominated in U.S. dollars, rose by 4.4% to reach about $3.7 billion (or NIS 12.1 billion).
• The Banking Sector: Credit facilities had increased by about 2% at the end of Q2 2021 compared with the previous quarter, to reach about $10.3 billion (22% of which is attributed to the public sector). Customer deposits grew by 4% during the same period, to reach $15.7 billion. Banks’ net profits for this quarter amounted to $33.9 million, a decline of 39% compared with the previous quarter.

• Palestine Stock Exchange: The market value of the shares of companies listed on the Palestine Exchange reached $3.9 billion at the end of Q2 2021. This represents a remarkable growth of 14% compared with the previous quarter. The Al-Quds Index closed at 540 points, an increase of 16% compared with the previous quarter.

• Inflation and Prices: In Q2 2021, the Palestinian economy witnessed positive inflation (a rise in prices) at a rate of 1.14% compared with the previous quarter. Consequently, for those who receive and spend their income in shekels, purchasing power declined at the same rate between the two quarters. As for those who receive their income in U.S. dollars and cover their expenses in shekels, their purchasing power decreased by 1.39%. This was a result of the 0.24% decrease in the U.S. dollar exchange rate relative to the shekel and a 1.14% increase in the inflation rate. Given that the Jordanian dinar is pegged to the U.S. dollar at a fixed exchange rate, the purchasing power of the dinar varied basically in line with the U.S. Dollar.