Triple crises have left Palestinian economy ‘struggling’

25 Nov 20

A political standoff with the Israeli government has combined with Covid-19 and a pre-existing economic slowdown to leave the Palestinian Authority struggling, the World Bank has said.


In a report on Palestine’s economy, the bank said its GDP is expected to decline by 8% in 2020 because of the “triple crises reinforcing each other”.

The authority suspended cooperation with Israel in May over its plans to annex parts of the West Bank, which Palestine said would make a two-state solution to the pair’s decades-long antagonism impossible.

Israel then withheld 3bn shekels (£675m) of clearance revenues – taxes collected by Israel on Palestinian imports, which it usually transfers monthly – from the authority until the two parties agreed to resume cooperation earlier this month, when the annexation plans were frozen.

The World Bank said these revenues could potentially help stabilise the economy, and stressed the importance of their uninterrupted flow in the future, but warned they will not be enough on their own to end the crisis.

“Even though the Palestinian Authority’s recent decision to resume coordination with Israel is expected to ease the fiscal stress, a large financing gap of $760m is projected for 2020 and additional efforts by the Palestinian Authority, the donor community and Israel remain crucial to secure additional financing,” the report said.

Israel occasionally withholds these revenues, which are the largest source of income for the authority, for political reasons or following attacks.

In February 2019 it deducted sums it said were equal to the amount the Palestinian Authority paid to Palestinians detained in Israel and their families.

This, the World Bank said, slowed the Palestinian economy so much that unemployment reached 27%. Unemployment dropped to 24% by the end of 2019, but the onset of Covid-19 came while the economy was already wea –, and a second wave looks likely to cause further damage, the World Bank said, calling the outlook “grim”.

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