With reforms, Palestinian economy could grow 7% each year — World Bank

With reforms, Palestinian economy could grow 7% each year — World Bank

New report says fiscal policy overhaul coupled with easing of Israeli restrictions needed to boost productivity in West Bank and Gaza

Sue Surkes is The Times of Israel's environment reporter.

Illustrative photo of cars being transported near the Erez Crossing into Gaza. (Tsafrir Abayov/Flash90)
Illustrative photo of cars being transported near the Erez Crossing into Gaza. (Tsafrir Abayov/Flash90)

The World Bank on Monday called on Israel and the Palestinians to implement reforms which, it said, could raise growth in the Palestinian economy to an average of seven percent per year.

Annual growth is currently predicted at two to three percent, less than population growth.

The bank called on the Palestinians to strengthen its central government and pass a series of fiscal reforms including improved tax collection, increased investment in public infrastructure and vocational training, and an overhaul of business regulation.

It also said Israel should streamline procedures at border crossings, remove restrictions on Palestinians entering Area C of the West Bank, which is controlled by Israel under the 1993 Oslo Accords, and lift the blockade on Gaza.

These measures from both sides could increase the West Bank’s economy by 36% and Gaza’s by 40% by 2025, the report predicted.

Israel has maintained a blockade on Gaza for 10 years, saying this is necessary to keep arms and other materials that can be used for military purposes out of the hands of Hamas and other Palestinian terror groups. Hamas took control of the Strip in 2007.

File: World Bank headquarters in Washington DC (Photo credit: Courtesy World Bank)

Marina Wes, World Bank Country Director for the West Bank and Gaza, said that “if parties show serious commitments, the prospects are promising in the medium term.”

But the report warns that failing to address a declining jobs situation among Palestinians will exacerbate already high youth unemployment rates and result in nearly half of the Gazan labor force being out of work by 2025. Such high unemployment would hamper chances of a boost in growth.

“An unemployed population is a recipe for discontent, frustration and worse,” said Wes. “This is in no one’s interest.”

The report will be presented to the Ad Hoc Liaison committee (AHLC) on September 18, in New York, a policy-level meeting for development assistance to the Palestinian people.

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