Palestinian economy grows 6.1% from Jan.-Sept. 2012

Despite increased production, attributed to construction, retail, industry and booming service sector, uncertainty plagues Palestinian economy.

By
January 2, 2013 18:54
1 minute read.
Palestinian man walks through the market

Palestinian man walks through the market. (photo credit: REUTERS)

The Palestinian economy grew at a healthy 6.1 percent in the first three quarters of 2012, according to figures released this week by the Palestinian Central Bureau of Statistics (PCBS), but the outlook for the coming year was plagued with uncertainty.

Through September, economic growth in Gaza outpaced that of the West Bank by 2.2%. The timeframe for the figures, however, did not cover November’s Operation Pillar of Defense in Gaza.

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At the same time, prices rose some 2.9%, eating moderately into the real growth.

Yet despite the increased production, which the PCBS said came from construction, retail, industry and a booming service sector, Palestinian unemployment skyrocketed, suggesting that the growth was not being enjoyed evenly throughout society. In the West Bank, unemployment jumped to 19.2%, up from 17.5% a year earlier. In Gaza, the number soared to 30.6%, a 2.5% increase.

All-in-all, Palestinian unemployment hovered at 23% in the first three quarters of 2012. The number of Palestinians employed in Israeli settlements dropped a half-point to 9.6%.

Despite some good economic news, uncertainty haunted the forecast for the coming year. The PCBS outlined a trio of scenarios ranging from an optimistic 5.5% growth scenario to a stringently pessimistic scenario, entailing a 14.5% contraction.

In the best-case scenario, foreign aid would jump 20%, tax transfers from Israel would remain uninterrupted and freedom of movement would increase both within the territories and with neighboring countries. In the rose-colored future, employment would jump 8.7%, as households consumed more and the government budget broadened to prop up the poor and invest in the economy.

A middling scenario envisioned tax evasion on the rise and a deterioration of government economic activity based on taxes frozen in Israel, as well as more barriers to movement. In that scenario, the economy would sink into a recession, shrinking 2.3%, while a quarter of government revenues would evaporate.

In the worst-case scenario, a sharp reduction in tax income paired with political economic maneuvers from Israel would lop 14.5% from the economy, cut government revenue in half and add 4% to the unemployment rate.


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