Economic Monitoring Report to the Ad Hoc Liaison Committee
The Palestinian economy has started its recovery in 2021 as COVID-related (coronavirus) measures have been eased, but sustainable sources of growth going forward remain limited. Given the decline in the daily number of new COVID-19 cases, lockdowns...
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| Format: | Report |
| Language: | English |
| Published: |
World Bank, Washington, DC
2021
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| Online Access: | http://documents.worldbank.org/curated/undefined/443631635864878225/Economic-Monitoring-Report-to-the-Ad-Hoc-Liaison-Committee http://hdl.handle.net/10986/36595 |
| Summary: | The Palestinian economy has started
its recovery in 2021 as COVID-related (coronavirus) measures
have been eased, but sustainable sources of growth going
forward remain limited. Given the decline in the daily
number of new COVID-19 cases, lockdowns have been
significantly eased in 2021. This combined with the pickup
of the vaccination campaign allowed consumer confidence to
slowly pick up and business activity to gradually rebound.
The economy is estimated to have grown by 5.4 percent, in
real terms, in the first half (H1) of 2021, year-on-year.
The improved economic performance was fully driven by the
West Bank economy while Gaza’s economy remained almost
stagnant in H1 2021 due to the 11-day conflict in May.
Growth is expected to further pick up throughout the
remainder of the year and reach 6 percent in 2021 as the
West Bank economy continues to regain more of what was lost
during 2020 and with the implementation of some Israeli
confidence building measures supporting economic activity
and facilitating reconstruction in Gaza. In the following
years, growth is expected to hover around 3 percent as the
low base effect weakens and as sources of growth remain
limited given the ongoing restrictions on movement, access
and trade. Unemployment remained stubbornly high in 2021,
mainly driven by Gaza. The unemployment rate in the
Palestinian territories reached 26.4 percent in the second
quarter of 2021: 16.9 percent in the West Bank and 44.7
percent in Gaza, reflecting the particularly difficult
economic situation in the Strip due to the effect of the
11-day conflict and the ongoing restrictions. The extremely
high unemployment rate in Gaza comes hand-in-hand with
deteriorating social conditions in the Strip. Estimates by
the World Bank indicate that the recent conflict has pushed
poverty in Gaza to 59.3 percent in 2021 (using 5.50 US
Dollars a day (2011 PPP) international poverty line). This
is 2.3 percentage points higher than the COVID-19 induced
peak in 2020, and a 16.3 percentage point increase above the
2016-2017 values (latest available official data). |
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