An abrupt decline in economic activities and pressure on the Palestinian Authority (PA)’s finances have placed Palestinian livelihoods at high risks, due to Coronavirus (COVID-19), World Bank revealed on Sunday.
After growth of a mere 1 per cent in 2019, the economy is projected to contract by at least 7.6 per cent in 2020, the World Bank said.
Beyond the immediate crisis, lifting restrictions on the development of digital infrastructure and fostering better regulations could play an important role in stimulating an already faltering economy, it suggested.
“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,” the World Bank said in a statement a copy of which sent to Palestine Post 24.
“However,” Kanthan Shankar, World Bank Country Director for West Bank and Gaza, said, “several years of declining donor support and the ed 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.”
The new World Bank economic monitoring report highlights critical challenges facing the Palestinian economy. The economy may shrink by at least 7.6 per cent, based on a gradual return to normality from the containment, and by up to 11 per cent in the case of a slower recovery or further restrictions.
The PA’s fiscal situation is expected to become increasingly difficult, due to a decline in revenues and substantial increase in public spending on people’s medical, social, and economic needs.
Even with reallocations of some expenditures, the financing gap could increase alarmingly, from an already high $800 million in 2019 to over $1.5 billion in 2020 to adequately address these needs.
Even prior to the Coronavirus pandemic, more than a quarter of Palestinians lived below the poverty line. The share of poor households is now expected to increase to 30 per cent in the West Bank and to 64 per cent in Gaza.
Even more striking is the youth unemployment rate of 38 per cent, well beyond the Middle East & North Africa’s regional average.
The economy’s potential remains confined by restrictions on the movement of people and goods imposed by the Israeli occupation.
The report will be presented to the Ad Hoc Liaison Committee (AHLC) during a virtual meeting on June 2, 2020. This will be a policy-level meeting for development assistance to the Palestinian people.
Palestine Post 24