The Palestinian Economy. Theoretical and Practical Challenges

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Di Martino – Sarsour
3. Actual demand and available supply
Although a precise analysis of the attitudes and policies of various kinds of banking
institutions is behind the scope of the paper, a brief analysis of aggregate statistics
suggests that the potential market for micro credit in Palestine is significant. This is
because the amount of population that can be classified as being part of the B to D
segments is large (if not increasing), but also because by general standards ordinary banks
seem to have a rather conservative approach.
A rapid overview at general macroeconomic conditions in Palestine indicate that
after substantial increase between 2002 and the end of 2005, from 2006 real GDP
declined while the rate of unemployment stabilised around 20-25% (Figure 2).
Figure 2: Real GDP vs. Unemployment rate (2000Q1 – 2008Q3)
Source: Palestinian Central Bureau of Statistics (2009). 5
A closer investigation, however, shows that increasing poverty at national level paralleled
growing inequality between different geographic areas. In particular a large discrepancy
is evident between West Bank and Gaza Strip. Figure 3, shows that after 2006 GDP per
capita in the Gaza Strip declined sharply, while it increased in the West bank even if, by
the end of 2007, it was still below the 2000 level.
5 1997 is base year for real GDP during 2000-2003, and 2004 is the base year for 2004-2008.