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Palestinian economy starting to rebound, but challenges loom — World Bank

Report finds economy may grow 6% this year, but is expected to slow in 2022, with poverty in Gaza on the rise and the cash-strapped PA sinking further into debt

Women shop next to the rubble of destroyed buildings hit by Israeli airstrikes during an 11-day war between Gaza's Hamas rulers and Israel, at the main shopping road in Gaza City, Thursday, Sept. 23, 2021. (AP/Adel Hana)
Women shop next to the rubble of destroyed buildings hit by Israeli airstrikes during an 11-day war between Gaza's Hamas rulers and Israel, at the main shopping road in Gaza City, Thursday, Sept. 23, 2021. (AP/Adel Hana)

The economy in the Palestinian Territories is showing “signs of recovery” but still faces serious challenges including “very high unemployment and deteriorating social conditions” in Gaza, the World Bank said Tuesday.

In the first half of 2021, growth reached 5.4 percent, and is expected to reach 6% this year, the World Bank said in a report. However, growth in 2022 is predicted to slow to around 3%, it added.

“The way ahead is still uncertain,” said Kanthan Shankar, World Bank Country Director for the West Bank and Gaza, adding that progress “depends on coordinated actions by all parties in revitalizing the economy and providing job opportunities for the young population.”

The Gaza Strip was hit hard during 11-days of devastating conflict with Israel in May, while the economy was also impacted by restrictions imposed to stem the spread of coronavirus.

In Gaza, a Palestinian enclave of two million people controlled by the Islamist terror group Hamas, unemployment stands at 45%, while the poverty rate has risen to 59% from 43% five years ago.

“The dire living conditions and the high dependency on social assistance of the people of Gaza is of particular concern,” Shankar said.

Palestinian men gather to apply for work permits in Israel, at Jabaliya refugee camp in the northern Gaza Strip, on October 6, 2021. (Mahmud Hams/AFP)

In the West Bank, the unemployment rate is around 17%, the World Bank calculates, saying the “Palestinian Authority’s fiscal situation remains very challenging” and warning it was “no longer able to borrow from domestic banks.”

The PA’s deficit is expected to reach $1.36 billion in 2021, it added.

Palestinians walk in front of a currency exchange counter in the West Bank city of Ramallah on October 5, 2021. (ABBAS MOMANI / AFP)

The World Bank called on donors “to help reduce the budget deficit,” and for the “systematic transfer” of revenues Israel raises from businesses operating in Area C of the West Bank, where Israel holds full control under the 1995 Oslo Accords.

“Releasing some of these funds would provide much needed quick financing in these difficult times,” it added.

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