International recognition of a Palestinian state is gathering momentum, a trend that will continue over the next decade and deepen Israel's diplomatic isolation. However, actual statehood remains a far-off prospect.
The dissolution of the Palestinian unity government in June 2015, followed by President Mahmoud Abbas' resignation from the chairmanship of his political faction in August, point to a growing governance vacuum in the West Bank and Gaza. The risk of a comprehensive collapse of the Palestinian political system is increasing, amidst a stagnating economy and the multitude of challenges confronting the Palestinian leadership. Tensions between the rival Palestinian factions will remain high, preventing the reconstruction of the Gaza Strip and fuelling political instability.
The economic outlook for the West Bank and Gaza will remain characterised by lacklustre growth prospects and substantial exposure to elevated political risks over 2016. We forecast overall real GDP growth of 3.6% in 2016, compared to an annualised 5.7% between 2010 and 2014.
Israeli-Palestinian peace talks resumed in August 2013, but failed to progress past their April 2014 deadline. We retain our view that despite efforts by US Secretary of State John Kerry, the current political configuration in Israel, combined with the increasing fragmentation of the Palestinian governance system, will hinder any progress in negotiations.
Key Risks To Outlook
The wave of violence raging across Israel and the occupied West Bank since October 2015, aside from its negative implications for the Israeli economy, underscores the growing crisis of legitimacy faced by the Palestinian leadership. Although not our core scenario, the danger of a third intifada is growing and constitutes one of the main risks for the broader region over 2016.
Any sustained punitive economic measures imposed by Israel that further constrain exports and imports, or disrupt governmental revenue flows, would pose downside risks to our forecasts for growth and the government budget.
Popular discontent, either with Israel or the lack of progress among Fatah and Hamas, could lead to social unrest and thereby undermine the growth prospects of the West Bank and Gaza, and weigh on the territories' political risk profile.
|Real GDP growth, % y-o-y||2.2||-0.4||3.4||3.6|
|Nominal GDP, USDbn||12.5||12.8||13.6||14.6|
|Consumer price inflation, % y-o-y, eop||2.7||0.7||2.7||3.5|
|Exchange rate /USD, eop||1.00||1.00||1.00||1.00|
|Budget balance, % of GDP||2.1||3.2||1.3||1.1|
|Current account balance, % of GDP||-19.1||-10.9||-16.8||-17.4|
The Jordan and the West Bank & Gaza Country Risk Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Jordan, West Bank and Gaza. It is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.
An influential new analysis of Jordan, West Bank and Gaza's economic, political and financial prospects through end-2019, just published by award-winning forecasters, BMI Research.
- Forecast the pace and stability of Jordan, West Bank and Gaza's economic and industry growth through end-2019.
- Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
- Assess the critical shortcomings of the operating environment that pose hidden barriers and costs to corporate profitability.
- Contextualise Jordan, West Bank and Gaza's country risks against regional peers using BMI's country comparative Risk Index system.
- Evaluate external threats to doing business in Jordan, West Bank and Gaza, including currency volatility, the commodity price boom and protectionist policies.
BMI provides our fully independent 5-year forecasts for Jordan, West Bank and Gaza through end-2019 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.
Economic Outlook Contents
The Jordan and the West Bank & Gaza Country Risk Report features BMI's forecasts with supporting analysis for 2015 through to end-2019, set against government views and BMI's evaluation of global and regional prospects.
Key Areas Covered:
- Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
- BMI's comprehensive Risk Index system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.
- Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
- Balance of Payments - trade and investment, current and capital account.
- Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
- Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
- Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
- Foreign Direct Investment - approvals, inflows and climate.
- External Debt - debt profile (short and long-term plus public and private sector obligations).
- Global Assumptions - forecasts for each year to end-2019 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.
- Rely upon BMI's 100% independent forecast scenarios for Jordan, West Bank and Gaza and underlying assumptions - we take no advertising and are privately-owned.
- Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Jordan, West Bank and Gaza, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
- Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.
What are the political risks to doing business in Jordan, West Bank and Gaza over the next 5-years?
BMI's Jordan, West Bank and Gaza country Risk Index evaluates the short- and medium-term threats to political stability.
Political Outlook Contents
- SWOT Analysis for the Jordan, West Bank and Gaza Market - Political Strengths, Weaknesses, Opportunities and Threats facing Jordan, West Bank and Gaza.
- Political Stability and Risk Assessment - BMI's Risk Index assesses explicit short- and long-term risks to political stability; latest positioning and trends for Jordan, West Bank and Gaza's risk are compared with regional and global averages.
- Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.
- Long-Term Political Outlook BMI examines the structural risks to the stability of Jordan, West Bank and Gaza’s political system and the dominant public policy issues likely to affect decision-makers, and outlines scenarios for how the state could evolve in the medium to long term.
- Benchmark Jordan, West Bank and Gaza's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
- Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
- Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.
What are the current operational risks and difficulties associated with doing business in Jordan, West Bank and Gaza?
The Operational Risk section gives an evaluation of current risks and difficulties associated with operating in the market. It also provides a brief overview of the regional Operational Risk Index which benchmarks Jordan, West Bank and Gaza against its neighbours.
Operational Risk Contents
The chapter provides a summary of the main threats in the country, within:
- Labour Market Risk (Education; Availability of Labour; and Labour Costs)
- Logistics Risk (Market Size and Utilities; Quality and Extent of the Transport Governance)
- Trade and Investment Risk (Economic Openness; Government Intervention; and Legal Risks)
- Crime and Security Risk (Crime; Terrorism; and Interstate Conflict risks).
The report also drills down in greater depth to address key issues in one of the following segments most critical to the market:
- Transport network, economic openness, cost and availability of labour, crime risks, bureaucratic environment, market size and utilities, and interstate conflict.
- Assess your company’s exposure to country specific operational and business risks, using BMI’s insight on the current dangers of operating in the market.
- Evaluate Jordan, West Bank and Gaza’s risk profile against its regional peers, helping you understand the market’s strengths and weaknesses in relation to other countries.