Donor Support Crucial to West Bank and Gaza’s Recovery

  • Gaza struggles to rebuild economy after last summer’s war
  • West Bank economy continues to labor under weight of Israeli restrictions
  • Israeli-Palestinian peace will be key to turning around economy
  • The Gazan economy is struggling to rebuild in the wake of the violent conflict last summer that resulted in losses of over $4 billion. The war also affected confidence in the West Bank, where Israeli restrictions on the movement of labor, access to resources, and trade continue to undermine growth prospects.

    The IMF has issued its latest report on the economy of the West Bank and Gaza in advance of the May 27 meeting of the Ad Hoc Liaison Committee, a coordination mechanism chaired by Norway for development assistance to the Palestinian people.

    IMF mission chief Christoph Duenwald spoke to the IMF Survey about the report’s findings, outlining what the Palestinian Authority can do to turn the economy around and how the international community can assist.

    IMF Survey : The Gaza-Israel conflict dealt a harsh blow to the Palestinians in the summer of 2014. What was the impact on the economy of West Bank and Gaza?

    Duenwald: Gaza, where the war played out, saw real GDP decline by 15 percent last year. According to official estimates, the losses from the war are over $4 billion, about 35 percent of West Bank and Gaza’s GDP. Tens of thousands of homes and enterprises were destroyed or damaged, businesses shut down, and utilities and infrastructure were severely damaged.

    The humanitarian impact of the war was devastating. More than 2,100 Palestinians died during the conflict, with thousands more injured, and a third of the population was internally displaced. After 51 days of war, there was a truce that ended the fighting, but there’s no permanent truce yet between the two sides.

    IMF Survey : Can you provide an update on where things stand now with the economy?

    Duenwald: The economy faces very severe challenges. Even if you don’t factor in last year’s conflict, growth in recent years has not been sufficient to absorb the rapidly growing labor force, so unemployment rates have been very high, especially in Gaza.

    In Gaza, reconstruction is proceeding slowly, which reflects in part limitations on the import of construction materials into Gaza. Still, we expect some rebound this year from a low base, with real GDP growing at 7 percent. A big challenge in Gaza is the high unemployment rate, which stands currently at 43 percent overall and at 60 percent...

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