Palestine Economy Contracts in Q1

2026-06-30 08:47 By Kyrie Dichosa 1 min. read

Palestine's economy contracted 4.8% year-on-year in the first quarter of 2026, following a 3.0% expansion in the previous period.

It marked the first annual contraction since Q3 2024, as final consumption fell 5.7%, reflecting declines in household spending (-2.1%), government consumption (-27.8%), and NPISH consumption (-13.0%).

Gross capital formation also decreased 1.6%, with gross fixed capital formation slipping 1.3%.

Meanwhile, exports increased 7.2%, driven by a 9.0% rise in goods exports despite a 17.2% decline in services exports, while imports rose just 1.3%, leading to a smaller net export deficit and making a positive contribution to GDP.

On a quarterly basis, the economy contracted 8%, reflecting the continued impact of the Israeli aggression, while the West Bank economy also shrank by 8% over the period.



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Palestine Economy Contracts in Q1
Palestine's economy contracted 4.8% year-on-year in the first quarter of 2026, following a 3.0% expansion in the previous period. It marked the first annual contraction since Q3 2024, as final consumption fell 5.7%, reflecting declines in household spending (-2.1%), government consumption (-27.8%), and NPISH consumption (-13.0%). Gross capital formation also decreased 1.6%, with gross fixed capital formation slipping 1.3%. Meanwhile, exports increased 7.2%, driven by a 9.0% rise in goods exports despite a 17.2% decline in services exports, while imports rose just 1.3%, leading to a smaller net export deficit and making a positive contribution to GDP. On a quarterly basis, the economy contracted 8%, reflecting the continued impact of the Israeli aggression, while the West Bank economy also shrank by 8% over the period.
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