Area: 360 KM Population: 1.8 million GDP (current prices): US$2,9 billion GDP per capita (current prices): US$1,715.4 Poverty: 39 percent Unemployment: 41 percent
A. The Palestinian Economy
The Palestinian economy entered into a recession in 2014. A quarter of the Palestinian workforce remains unemployed—including 16% in the West Bank and 45% in Gaza. A quarter of the Palestinian population lives in poverty, with rates in Gaza twice as high as in the West Bank. The economic slowdown has resulted in fiscal pressures that put at risk the provision of public services by the Palestinian Authority.
The PA is facing a grim fiscal situation: with a higher than expected budget deficit and donors’ expected support in 2014 less than last year’s amount, it is trying to reverse the situation through steps to raise domestic revenues and control expenditures. A dynamic private sector can generate the sustainable growth needed; however, restrictions put in place by the Government of Israel continue to stand in the way of potential private investment. Access to Gaza remains highly controlled, and much of Area C, which makes-up 60% of the West Bank, is inaccessible to Palestinians.
The Gaza Economy: Economic activity in Gaza remains volatile and almost entirely dependent on aid and remittances, with growth rates determined by (i) the level of aid inflows and (ii) the degree of trade restrictions. Gaza’s final consumption is 1.6 times larger than GDP, and its investment a mere 5 percent of GDP, predominantly in housing. Estimated exports are very low at less than five percent of GDP. Gaza’s GDP per capita is half of that in the West Bank, and its poverty rate is roughly twice as high as those in the West Bank.