Palestine Current Account Deficit Narrows in Q2

Palestine recorded a current account deficit of USD 750 million in the third quarter of 2025, narrowing from USD 870 million in the corresponding quarter of the previous year. The trade balance deficit for goods contracted to USD 1,105 million from USD 1,333 million a year ago, in addition to the services balance shortfall, declining to USD 214 million from USD 263 million. At the same time, the net income surplus widened to USD 307 million from USD 275 million, supported by higher compensation for Palestinian workers in Israel and increased foreign investment income, mainly resulting from interest earned on Palestinian deposits in foreign banks. Meanwhile, surplus in the net current transfers from abroad fell to USD 262 million from USD 451 million, due to lower transfers to government and other sectors.

Palestine’s current account deficit narrowed sharply to $665 million in Q2 2025 from $801 million in the corresponding quarter of the previous year. The improvement was mainly driven by the increase in the income surplus growth, which rose to $195 million from $191 million in Q2 2024, while the goods deficit narrowed to $1,075 million from $1,161 million. In addition, the current transfers surplus expanded to $425 million from $338 million. On the other hand, the services deficit widened to $210 million from $169 million in the same period last year.

Palestine’s current account deficit widened to $963 million in Q1 2025 from $836 million in the same period of the prior year, marking the biggest gap since Q4 2023. The increase was primarily driven by the slowdown in the income surplus growth, which eased to $253 million from $289 million in Q1 2024. Additionally, the goods deficit deepened to $1,340 million from $1,124 million, while the services deficit rose to $263 million from $154 million. On the other hand, current transfer surplus grew to $387 million from $319 million.