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World Bank optimistic about Palestinian economy’s performance

Palestinian economy's performance
Photo by Shadi Hatem

The World Bank has expressed optimism about the Palestinian economy’s performance but  warned of serious challenges hitting the job sector.

The Palestinian economy has recently recorded “signs of recovery,” but it is nevertheless facing “serious challenges” that extend, especially employment and “extremely unstable” public finance, the World Bank said.

In its report, the bank stated that the Palestinian economy in 2020 witnessed a deterioration due to the Coronavirus pandemic, which led to an increase in spending on the health sector. The pandemic also limited the number of Palestinian workers in Israel.

Palestinian economy’s performance

However, the report warned that the pace of this economic growth will slow next year to about 3% due to the continued limited resources.

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

The unemployment rate in the Gaza Strip, where about two million people live, is currently 45%. The poverty rate continues to rise in Gaza, reaching 59%, according to the report.

Israel recently announced an increase in the number of permits for Palestinian workers to reach 7,000.

In the West Bank, the unemployment rate is about 17%, according to the World Bank.

In its report, the bank expressed its concern about the financial conditions of the Palestinian Authority, which can no longer borrow from local banks, which leads to the withdrawal of more liquidity from the market.

The report predicted that the deficit of the Palestinian Authority would reach $1.36 billion in 2021, which threatens to make it more difficult to meet its various obligations by the end of the year.

In its report, the World Bank called on donor countries to help the Palestinian Authority with its “extremely unstable” financial resources in order to “reduce its deficit.”

The bank also called on Israel to organize transfers of tax funds collected in favor of the Palestinian Authority or travel fees across the Allenby Bridge, as these funds would provide “quick financing.”

Israel occupied the West Bank, including East Jerusalem, in 1967, and about 475,000 settlers live on Palestinian lands in settlements considered illegal under international law.

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