World Bank warns outlook ‘bleak’ for Palestinian economy
Global lender says Israeli restrictions ‘among the most important obstacles to growth and private sector development’ in West Bank and Gaza

The World Bank warned Tuesday that the Palestinian economy faces a “bleak” outlook, putting an emphasis on Israel’s blockade of the Gaza Strip and increased restrictions on the West Bank.
In a new report, the global lender commended efforts by the Palestinian Authority (PA) to slim its public wage bill but said the economies of the Gaza Strip and West Bank remain heavily dependent on foreign donor support and are hindered by Israeli restrictions.
Israeli-imposed “restrictions on movement and access in the West Bank and the restrictions resulting in near-blockade in Gaza remain among the most important obstacles to growth and private sector development in the Palestinian territories,” the report said.
Israel says the blockade on Gaza is necessary to prevent weapons from reaching the enclave’s rulers Hamas, which openly seeks the Jewish state’s destruction, and other terror groups.
“If not eased or lifted, the Palestinian economy is expected to continue operating well below its potential,” the report added.
Israel routinely withholds tax revenues from the West Bank-based PA, saying this is in response to Ramallah’s monthly payments to the families of Palestinians in Israeli prisons or killed by Israeli forces, including those who committed or planned attacks against Israelis — stipends that Jerusalem argues offers a direct incentive to commit terror attacks.
Under past peace accords, Israel collects taxes and customs revenues on the PA’s behalf.
In January, Finance Minister Bezalel Smotrich said Israel would withhold around $40 million of revenues in response to the PA successfully lobbying for a UN General Assembly vote referring Israel’s control of the West Bank to the International Court of Justice.
Some observers expressed fears of radical Israeli policy changes in the West Bank under Prime Minister Benjamin Netanyahu’s new hardline government, formed in late December.
The World Bank report warned that “decisions by the newly elected Israeli government to double the monthly deductions from clearance revenues… could signal a discouraging trend going forward.”
Further highlighting the West Bank’s economic dependence on Israel, the report noted some 22.5 percent of Palestinians there work in Israel or Israeli settlements in the West Bank.
Overall unemployment across Gaza and the West Bank stood at 24.4%, it added.
Outside “sources of risks, such as in the areas of food and energy prices, mean the overall economic outlook remains bleak,” Stefan Emblad, the World Bank’s country director for the West Bank and Gaza, said in the report.
The bank’s assessment coincided with another report Tuesday by UN Middle East peace envoy Tor Wennesland, warning that without an immediate “strategic shift” there could be a “serious reversal in the Palestinian state-building project.”