Press Release
For the National Accounts 1998

Introduction

The Palestinian Central Bureau of Statistics is pleased to disseminate the main findings of the national accounts for 1998. Similarly to the previous times we have published data, this release aims at giving the public an overall idea of the magnitude of the most important indicators in National Accounts, mainly the Gross Domestic Product (GDP), Gross National Income (GNI), and Gross National Disposable Income (GNDI).

Sources used for the compilation of the current estimates are based mainly on the findings of the Population, Housing and Establishment Census 1997. These sources include the series of economic surveys (industry, internal trade, contractors, services and transport) which the PCBS has conducted for 1998. It also includes the complementary economics surveys covering the informal sector, the financial intermediation survey, the Palestinian consumption and expenditure survey and the labor force survey for 1998. Moreover, sources include the administrative records of the governmental and international institutions including the budgets of municipalities and rural councils, agricultural statistics, foreign trade statistics and the rest of the world account.

As adopted for the 1997 National Accounts, the so-called supply and use table was used as a basis for compilation. This methodology ensures that data are internally consistent even at a disaggregate level, where equality is established between the supply and use sides by adjusting the data of lower quality to be consistent with those of better reliability. This clearly implies a higher level of quality and internal consistency of the estimates compared to those published previously.

As figures indicate, a substantial improvement in the performance of the economy for 1998 is quite apparent. The GDP and the GNI estimates have substantially increased this year, as well as their per capita indicators. The activities of domestic trade, construction and transport have clearly improved during this year contributing to the Gross Domestic Product with a higher value added. Moreover, the output of financial intermediation for banks and insurance companies has increased during this year as well as that of the agricultural sector that had a good olive harvest. It is worth mentioning that unemployment during this year has declined by 5.9% recording a percentage of 14.3%.

In view of the dependence of the Palestinian economy on the Israeli ‘s, it is quite obvious that the substantial decline in the number of closure days as compared to previous year had its influence in activating the economic sectors particularly domestic trade, construction and transport. This has also increased the value of compensation of employees from Israel causing an upward shift to the Palestinian Gross National Income. Moreover, the Palestinian National Authority has taken during this year a number of measures to encourage privatization and investment that may have led to part of this growth.

• Data is preliminary:

In view of the preparation of the revised time series 1994-1998 at current and constant prices, the current data is preliminary and may be subject to change. The revised time series is expected to be released by the end of the first quarter of the next year.

• Data is at nominal terms:

Data released today is merely at nominal terms and does not reflect actual indicators of the trend of the economy. Both the price inflation and the depreciation of Israeli Shekel compared to Dollar should be taken into account. 

• Comparison with 1997

Although sources and methodology for the National Accounts estimates in years 1997 and 1998 are consistent, where both are based on the same statistical sources and compilation methodology; namely the supply and use table, it is worth mentioning that comparison between the two years could be misleading due to the following reasons:

The Definition of Remaining West Bank and Gaza : the definition of this geographical term for 1998 differs than that for 1997. For 1998, it refers to all of the West Bank except for those parts of Jerusalem annexed after the 1967 occupation by Israel, whereas in 1997 it refers to the West Bank excluding the whole Jerusalem Governorate. Therefore, this difference in definition should be taken in consideration when comparing the data of this geographical area between the two years, as an unnegligible component of the increase is due to the expansion of the geographical definition.

The sampling method of economic surveys : The economic surveys sample for 1998 was designed based on a new methodology which had a clear improvement on the coverage of the statistical population compared to the previous year. This in turn has led to higher results in the series economic surveys.

Improvement in coverage for 1998 : With the accumulation of experience and knowledge in the balancing procedures as well as in the inter linkages of the various economic sectors, there was an improvement in the coverage for 1998, particularly in the production of the household informal sector. Therefore, this should be taken in consideration when comparing to the previous year. It is worth mentioning that a revision to the 1997 estimate will be made along with the revision of the revised time series 1994-1998 at current and constant prices.

• Jerusalem Data

The Jerusalem data as defined above for 1998 lacks the quality of Remaining West Bank and Gaza (RWBG) data due to its particular circumstances. Moreover, the supply and use table methodology was used only for the Remaining West Bank and Gaza due to the poor quality of Jerusalem data. Therefore, data pertaining to this part should be used cautiously.

Gross Domestic Product 1998

In 1998, the GDP of the Palestinian Territories amounted to around $4.5 billion. While it amounted to $4.1 billion in the Remaining West Bank and Gaza.

Gross National Income 1998

Gross National Income (GNI) – which measures the income of all Palestinian residents due to their participation in the productive process and ownership of financial assets –is significantly higher than GDP. This is mainly due to income from wages earned by Palestinian border workers in Israel, but also from interest rate earned by Palestinian residents’ abroad. In 1998, total GNI in the Palestinian Territories amounted to $5.5 billion, as for the Remaining West Bank and Gaza, it amounted to $5 billion. It is worth mentioning that the compensations of employees from Israel have substantially increased during this year due to the little closures during this year compared to the previous one.

Gross National Disposable Income 1998

Similarly to other developing countries, in Palestine gross disposable income is higher than both GNI and GDP. This is mainly due to current grants extended by the international donor community, but Palestinians living in the diaspora also contribute significant amounts by transferring funds to their relatives inside the country. GNDI in the Palestinian territories amounted to $5.9 billion, while in the Remaining West Bank and Gaza $5.3 billion.

It is worth mentioning that the whole net current transfers from abroad has decreased by 8%, which is mainly due to the decrease of the current grants from the international community by 41%.

Most significant percentage contributions of economic activities to GDP 1998

The following are the most significant percentage contributions of economic activities to GDP:

Compared to previous year, the contribution of internal trade, construction and financial intermediation have increased , while that of manufacturing and services has slightly decreased.

Regarding per capita terms, the aforementioned numbers translate into GDP per capita of $1,548 in the whole area. For the Remaining West Bank and Gaza, GDP per capita is $1,538, with a regional distribution of $1,679 for the Remaining West Bank and $1,316 for Gaza.

Obviously, GNI per capita is higher. For the Palestinian Territories it amounted to $1,890. In the Remaining West Bank and Gaza it amounted to $1,847 with a regional distribution of $2,037 for Remaining West Bank and $1,546 for Gaza.

GNDI per capita is yet higher. For the Palestinian Territories, it amounted to $2,021. As for the Remaining West Bank and Gaza, it reached $1,979. Again, GNDI per capita was considerably higher in the Remaining West Bank than in Gaza. In the former region it amounted to $2,169 and in Gaza to $1,678.