Asma Marzouq – Palestine Economy Portal

Translated by Tamara Barakat

Experts anticipated that the money transfers of Palestinians living abroad to Palestine, especially those working in the Gulf States, will be affected due to the crisis resulting from the drop in oil prices.

The Chair of the Economics Faculty at the An-Najah University, Abdelfattah Abu Shokor, said that this great drop in oil prices will probably lead to a decrease in government spending in the Gulf States and a decline in the number of projects to be implemented. Some of the existing projects might even be halted. Consequently, the demand for foreign labor will also decrease and some of it, including the Palestinian labor, might be laid off.

He explained that the economy of the Gulf States relies on oil, and so the decrease in its prices will affect all of the pillars of economy. Many of the Gulf States suffered from a deficit in their budget last year, mainly because of the drop in oil prices.

Regarding the consequences of a decline in money transfers, Abu Shokor said that this will lead to a decrease in the overall demand and the consumption of families, which in itself will also lead to a decline in growth and deepening the state of economic stagnation that has been ongoing in Palestine since 2013.

Oil prices dropped by more than 70% from September 2014 until January 2016.  The price of an oil barrel decreased from 100 to 30 dollars.

The CEO of PADICO Holding, Dr. Samir Hulileh, anticipated that the ability to hire or retain the already hired labor will be affected in the countries whose economy primarily depends on oil.

He believes that Palestinians working in the Gulf States live in somewhat stable conditions due to the nature of the jobs they hold. “Their conditions are somewhat stable since they hold accounting and teaching posts that are considered stable jobs, unlike the employees coming from East Asian countries, who mostly work for oil extraction and marketing companies.”

Hulileh added that some Palestinians might be affected by the oil crisis next year if the oil prices do not increase to a level that suits the Gulf States.  

The 2013 data published by the World Bank showed that the overall money transfers of Palestinians living abroad to Palestine were around 1.74 billion US dollars, forming 15.8% of the GDP during 2013. The overall GDP of 2013 was 11 billion US dollars, according to the Palestinian Central Bureau of Statistics (PCBS).

Although there are no precise statistics available at the Monetary Authority or the PCBS regarding the amount of money transfers from each country, the majority of them come from the Gulf States, followed by the US and the EU countries respectively.