The World Bank's report on the Palestinian economy foresees hard times / Omar Shaban

The World Bank will present its report on the Palestinian economy at the donors' conference due to convene at the end of this month, April 2019, in the Belgian capital Brussels. The report anticipates hard indicators for the Palestinian economic situation. Following is a summary of what came in this as-yet-unpublished report.

• The Palestinian economy saw “no real growth” in 2018: the economy in Gaza contracted by about 7%, and the West Bank underperformed at less than 1% — while population growth reached 3%, curbing the Authority's capacity to provide the needed services because of the increase in population.
• The report focuses on the very negative effects of the Israeli policy of barring or rationing the entry of dual-use goods into the Palestinian territories — not into the Gaza Strip alone. The report reviews that policy's effect on the Palestinian economic sectors, among them: medicine, the dairy and food industries, the chemical-industries sector, the technology-industries sector, and others.
• The report calls on the Israeli government to ease the restrictions on dual-use goods it applies to the West Bank areas and the Gaza Strip. The report affirms that should these restrictions be eased, the economy in the West Bank would grow by 6%, and by more in the Gaza Strip — possibly reaching 11% by 2025.
• Average unemployment in the Palestinian territories reached 31%, 2.4% higher than 2017. In the West Bank it is 17%, while unemployment among those of working age in Gaza reached 52% in 2018, against 44% in 2017. Unemployment among graduates in the Gaza Strip is the highest in the world, reaching 68% overall and 76% among female graduates.
• 46% of the Gaza Strip's residents live below the poverty line, set at five and a half dollars daily, while this share in the West Bank is 9%.
• The report warns of the widening of the gap in financing the Authority's budget from 400 million dollars in 2018 to more than a billion dollars in 2019. The warning came in the wake of the recent Israeli measures deducting 138 million dollars from the Palestinian clearance funds Israel collects on the Authority's behalf under the Paris economic protocol — the Palestinian Authority refusing to accept the remaining tax funds in protest.
• Clearance transfers contribute 65% of the Authority's public revenues and 15% of total Palestinian national income.
• The Authority succeeded in cutting the public-expenditure bill by 8% in 2018 compared with the previous year, and the salary bill by 16% — owing fundamentally, “as the report says”, to reducing the salary rates of the Authority's employees in the Gaza Strip and terminating the contracts of thousands of them. The report says: according to the Palestinian ministry of finance, the number of public-sector employees shrank by 23,500 — 500 from the northern governorates and 23,000 from the Gaza governorates.
• The expected real growth rate in the West Bank will not exceed 1% in the coming years (2019–2021) — a rate too low to meet the needs of population growth and the demand for jobs; unemployment and poverty rates are therefore expected to rise.
• The banking sector in Palestine continues to realise profits despite the bad economic conditions, its assets reaching 15 billion dollars. The loans-to-deposits ratio is about 50%, most going to commercial facilities and the real-estate sector, with a small share going to the industrial and other productive sectors.
• The National Authority's indebtedness to the banks reached 1.5 billion dollars, and the employees' indebtedness to the banks 2.8 billion — the two together 4.3 billion dollars in 2018, representing 38% of total bank facilities extended.
• International support reached 718 million dollars in 2017 (the Arab share of it 543 million), falling to 676 million dollars in 2018 (the Arab share 516 million).
• Saudi Arabia is the largest Arab donor at 92 million dollars in 2017, its contribution rising to 222 million dollars in 2018. The World Bank's contribution was 76 million in 2017, falling to 10 million in 2018.

The report presents a pessimistic picture of the Palestinian economy's prospects amid the continuing Israeli measures and President Trump's policy toward the Authority and UNRWA and the halt of its projects in the Palestinian territories — alongside the decline of some Western and Arab funding, without overlooking the continuing negative effect of the Palestinian division on the economic and social situation.