World Bank: Palestinian Economy Could Retract 11%

Palestinians have escaped the COVID-19 health crisis relatively unscathed, but the economic pain is only beginning according to the latest World Bank forecast that warns shrinking donations and bubbling tensions will complicate its economic recovery.

  • By webmaster | June 1, 2020,1:50 pm
World Bank: Palestinian Economy Could Retract 11%

The World Bank released a statement Monday predicting Palestine’s economy will contract by at least 7.6% and up to 11% in 2020, depending on the speed of the country’s recovery post-COVID-19. It also forecasts that unemployment, which is already high, could hit 64% in Gaza, while the poverty rate could double.

World Bank Country Director for West Bank and Gaza Kanthan Shankar praised the strict lockdown that ended last week, and helped prevent a major virus outbreak in the occupied Palestinian territories. The World Bank official warned that structural problems such as an already low growth rate and regional tensions could slow the economic recovery. 

“With the COVID-19 pandemic in its third month, the crisis is affecting Palestinian lives and livelihoods. The Palestinian Authority has acted early and decisively to save lives,” Shankar said in a June 1 press release.

“However, several years of declining donor support and the limited economic instruments available have turned the ability of the government to protect livelihoods into a monumental task. Hence, external support will be critical to help grow the economy during this unprecedented period,” he warned. 

The World Bank is also predicting a dramatic increase in the Palestinian Authority’s (PA) government debt from $800 million in 2019 to over $1.5 billion in 2020 off the back of  substantial increases in public health and social security spending, and declining revenues and donor funds. 

Developing the digital economy is one way the World Bank suggests the West Bank and Gaza could accelerate their recovery from COVID-19 and overcome the movement restrictions on people and goods that hamper Palestine’s development. A major obstacle however, is the lack of infrastructure to build a digital future for Palestine with the West Bank still operating on 3G and Gaza 2G while much of the Middle East is rolling out 4G or 5G.  

“The digital economy can overcome geographic obstacles, foster economic growth and create better job opportunities for Palestinians. With its tech-savvy young population, the potential is huge. However, Palestinians should be able to access resources similar to those of their neighbors’, and they should be able to rapidly develop their digital infrastructure as well,” Shankar added.

The report will be considered by the Ad Hoc Liaison Committee (AHLC) on June 2. The AHLC is chaired by Norway, co-sponsored by the US and EU, and seeks to promote dialogue between donors, the Palestinian Authority, and the Israeli government.

Read also: Church of the Nativity Reopens, Boosting Spirits, Palestine’s Tourism

Related Articles

Morocco Extends State of Emergency, Turkey Further Eases Curbs
Morocco Extends State of Emergency, Turkey Further Eases Curbs

There is hope at the end of the tunnel for Moroccans, after the government said it will begin gradually lifting the country’s three-month-long COVID-19 lockdown.

COVID-19 Spreads to Darfur Refugee Camps
COVID-19 Spreads to Darfur Refugee Camps

Ravaged by war and stuck in camps for over a decade, a new threat emerges in Darfur.

EU Human Rights Court Rules in Favor of BDS Movement
EU Human Rights Court Rules in Favor of BDS Movement

The anti-apartheid BDS boycott is considered part of the right to freedom of expression after an EHCR ruling.

Art in War Torn Libya

Libyan digital artist Razan Al Naas (@razangryffindor) weaves the country’s culture and history into digital collages that provoke thought and awe. A large part of that history in recent times has been the instability and conflict that has ravaged the country since the overthrow of longtime dictator Muammar Qaddafi in 2011.  The increase in fighting […]