Analytical Reflections on the Direct Economic Impact of the Imposed Israeli Closure on the West Bank and Gaza Strip during the Jewish Holidays (4-14/10/2017) 

   Ola Awad             

   PCBS President

 

 

Restrictions on trade and the access to resources along with the blockade will affect the productive base (Labor and inputs necessary for production) taking into consideration that the share of manufacturing in the Palestinian economy is 14% of the GDP, while trade is 17% and agriculture is 3%.

 

 The weakness of the productive base as well as the dominance of the consumption pattern in the Palestinian economy has made it import dependent with imports over three times the size of exports causing a trade deficit close to 40% of GDP, in addition to the dominance of the Israeli occupation on the total trade exchange with the Palestinian Territories. The Israeli plan to besiege the West Bank and Gaza Strip for 11 days for the Sukkot holidays and the following Shabbat is a short run plan which is for known days, and those days are well known to the Palestinian Traders as it is a procedure made on yearly basis, but meanwhile it affects the capacity of the traders to keep inventories to meet the needs of the Palestinian market during the blockade period. Thus and in light of the said facts we, the Palestinians in the public and private sectors as well as the civil society to work side by side to increase our local productive capacity to be able of facing any economic shock whenever the Israeli occupation tries to make it.

 

Within the context of our statistical analysis of the Palestinian economy based on the available data of the economic time series and economic indicators in addition to the available the macroeconomic model, we can recognize three main direct effects:

1. Effects on the Labor Force

Our statistical findings for the workers in Israel and settlements show that preventing 128,400 workers working in Israel and settlements from reaching their work for 11 days will lead to s direct loss of about (USD 71 million) even after excluding the formal employment (workers who are working on monthly basis and get their salaries paid regardless of the blockade) which represents about 18% of the total number of workers.

2. Trade with Israel

Since Israel is the main trade outlet of the Palestinian economy, one can realize how the commercial exchange would be significantly affected especially when talking on the Palestinian imports and exports of fresh agricultural goods with Israel as it can’t afford any storage procedures. The Palestinian imports and exports of fresh agricultural goods per month mark around (USD 7 and 4 million respectively). The expected closure on the West Bank and Gaza Strip will directly affect the said goods.

On the other hand and since Palestine is exporting around (USD 1.5 million) of fresh agricultural goods such as herbs to the European countries via Israeli airports, this kind of potential sector will be affected too.

3. Inbound Tourism

The blockade for 11 days will cause a loss of about (USD 8.8 million) for the inbound tourism.

 

Thus, the total amount of direct losses resulting of besieging the Palestinian Territories for 11 days is expected to reach (USD 85.8 million).

PCBS Macroeconomic Model

In addition to statistical figures and data, PCBS utilizes certain economic models for analysis and forecasting among of which the economic model that has to do with the macroeconomic indicators based on analyzing the economic time series and econometrics models.

 To check the validation of the losses mentioned above, we use our macroeconomic model using simulation technique.  The main findings of this model shows that the total loss of GDP will be (USD 86 million) if the closure days were 11 days.  On other hand, the loss will be increased if the closure continues with no expected/known day to end.  Time series data show that on the previous years under the closure of the borders and the aggression of Israel, the effects on the growth rate were obvious since the GDP decreased around 10 to 15% by then.


 

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