The results of PMA Business Cycle Index (PMABCI) revealed that the overall index failed to maintain its gradual recovery. Falling this month to around -45.7 points compared to -29.2 points in the previous month, due to the resumption of almost complete closure on various economic activities since the beginning of July after entering the second wave of the spread of Corona virus.
In the West Bank, its index declined remarkably to around -43.7 points compared to -22.9 points in last June. This was resulted from significant declines in the indices of high value added activities, particularly the trade (from -16.9 to -22.4 points) and the manufacturing (from -0.8 to -7.4 points), in addition to the fall in agriculture index (from -0.5 to -8.5 points). Moreover, lesser declines registered in the indices of construction (from -1.8 to -2.0 points) and transport and storage (from -2.2 to -2.5 points). Meanwhile, the indices of renewable energy, and IT and communication have relatively maintained their previous levels at around -0.1 points for the former and -0.7 points for the latter.
According to the surveyed firm owners, the production and sales in the West Bank during July have significantly fallen, resulted in accumulated inventory. Moreover, they also revealed a high level of pessimism about future, expecting further declines in production and employment in the three coming months.
At the same time, the economic activity in Gaza Strip -despite not experiencing lockdown-remains subject to the regional and global developments. During July, Gazan index continued to decline, registering nearby -50.5 points compared to -44.2 points in June. This was led by the decreases in indices of all surveyed economic activities, except for construction, albeit at varying degrees. The trade index deteriorated this month (from around -29.5 points to -33.5 points), followed by the decline in the indices of agriculture (from -5.9 to -7.4 points), transport and storage (from -0.9 to -1.4 points) and manufacturing (from -5.4 to -5.8 points). Meanwhile, the indices of renewable energy, and IT and communication have relatively stabilized at -0.1 points and -0.4 points, respectively. However, the construction index registered the sole improvement, increasing marginally from -2.0 points to -1.9 points.
The consequences of the world lockdown pose new challenges to Gazan economy, which has been suffering from the blockade and the deteriorating economic conditions for years. Owners of Gazan surveyed firms indicated weak level of domestic production and sales, and accumulated inventory during July. Moreover, they expressed concerns on the production and employment levels in the three coming months.
It is noteworthy that the extended PMABCI is a monthly index, which aims at capturing the state and evolution of economic activity in Palestine by tracking sectoral performance (especially fluctuations in production, sales and employment levels). The overall index is simply the sum of all sectoral indices. Its maximum is positive 100 points, while the minimum is minus 100 points; a positive value indicates favorable economic performance, while a negative value indicates bad performance. 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.
PMA Business Cycle Index
Source: PMA (2020). PMABCI, July 2020.