It said he was wounded by Israeli gunfire in the neck and back, with doctors unable to save his life.
The death raises to five the number of Palestinian teenagers killed during Israeli military operations in the West Bank in the past month.
Israeli-Palestinian violence has intensified in recent weeks with near-daily arrest raids in Palestinian-administered areas of the West Bank, and tensions around a Jerusalem holy site sacred to Muslims and Jews.
The official Palestinian news agency Wafa cited witnesses as saying Ghunaim came upon the soldiers in al-Khader and tried to run away but the troops fired at him.
The Israeli military, which has stepped up its operations in the West Bank in response to a series of deadly attacks inside Israel, said soldiers opened fire at Palestinians who threw rocks and Molotov cocktails, endangering the troops.
"The soldiers provided an injured suspect with initial treatment at the scene" before transferring him to Palestinian medics, the military said in a statement.
Palestinian Prime Minister Mohammad Shtayyeh said Israeli forces "deliberately" shot at Ghunaim with the intention to kill him.
On Sunday, Israeli ultranationalists plan to march through the main Muslim thoroughfare of the Old City of Jerusalem.
The compound houses Al-Aqsa Mosque, the third holiest site in Islam. The hilltop site is also among the holiest for Jews, who refer to it as the Temple Mount.
The march is meant to commemorate Israel's capture of east Jerusalem in the 1967 Six-Day War.
Israel subsequently annexed the area in a step that is not internationally recognised.
The Palestinians claim east Jerusalem as the capital of a future state.
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