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Photo: SÚ Ramalláh
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Czech cars among the most successful in Palestine despite economic crisis

The COVID-19 pandemic and related restrictive measures have hit hard the already fragile Palestinian economy. Moreover, the crisis has been deepened by the suspended cooperation between the Palestinian and the Israeli administration. The overall economic downturn did not spare the foreign trade sector, and affected eventually the Czech exports to Palestine, the major part of which is comprised of passenger cars. Still, the Czech produced cars hold the leading position in sales – besides Škoda, the Czech-made Hyundai cars are establishing themselves in the market.

According to the preliminary results published by the Palestinian Central Bureau of Statistics (PCBS), the GDP contracted by 12 % in 2020 compared to the previous year (other estimates vary between 8 and 15 %). The pandemic and restrictive measures adopted to stop its spread have hit virtually all the sectors of Palestinian economy. The foreign trade, which was affected as well, dropped by 10 % year-on-year, and the imports to Palestine even by 11,3 %. After the record downturn in the second quarter, the situation started to improve in the second half of the year, but it fell short of the pre-pandemic values. The situation became further complicated by the suspension of cooperation, lasting from May until November, between the Palestinian Authority and Israel.      

The economic crisis had a negative impact on exports from the Czech Republic as well. Passenger cars represent the most significant part of it – in 2019, their share amounted to 97 % of the overall exports to Palestine worth 14 mil. USD. In 2020, 18 thousand of vehicles were newly registered by the Palestinian Ministry of Transport and Communications, which means more than 35 % decrease compared to the previous year, new cars representing only about 5 thousand of this number – remaining more than two thirds being newly imported second-hand vehicles.

The Czech brand Škoda, the new passenger car market leader in 2018, remains at the top of the ranking despite the decline in sales by 52 % in 2020. This is because the other importers find themselves in the same situation, and Škoda remains the second best-selling car brand, the same as last year. Moreover, the first place in the same category went to the brand Hyundai while growing share of vehicles of this brand imported to Palestine are produced in the Czech Republic as well – last year, it was already a majority of them.

With at least one of the two causes of the economic crisis being resolved now, an improvement of the situation is expected this year. PCBS published a forecast according to which the GDP is expected to grow by 6 % in 2021, and according to an optimistic scenario, it could even rise back up to the 2019 values by the end of the year. Hopefully, the Palestinian car market will follow this positive trend.