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Gaza war set to reverse Palestinian economic growth
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(8 months later)
The recent war in Gaza will result in a reversal of seven years of growth in the Palestinian economy, which is now expected to shrink by nearly 4% this year, the World Bank has said.
This could be because it launched early, our rights have expired, there was a legal issue, or for another reason.
It said Gaza would see a contraction of as much as 15%, while a slight recovery in the fourth quarter could push West Bank growth to about 0.5%.
The bank's report said the downturn was a result of the 50-day war between Israeli forces and militants in Gaza, restrictions on the flow of goods into the enclave by Israel and Egypt and a drop in foreign aid to the Palestinian Authority (PA).
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"The conflict and humanitarian tragedy in Gaza has made an already struggling Palestinian economy worse and put further stress on the fiscal situation of the Palestinian Authority," the report said.
This month the PA estimated that rebuilding Gaza after the conflict would cost $7.8bn (£4.8bn).
Egypt will host a donors' conference on 12 October with the aim of raising reconstruction funds, and donor nations are due to convene on the sidelines of the UN general assembly next week.
"The lack of a comprehensive peace agreement leads to a vicious cycle of economic decline and conflict," the report said of efforts to clinch a deal on Palestinian statehood, which collapsed in April.
Growth, spurred largely by international donor funds, has been decelerating since 2012 and slowed to less than 2% in 2013, but could rebound strongly in 2015 if Gaza reconstruction gets under way, the bank said.
A strong response to rebuilding needs could help growth top 4% in 2015, with Gaza growing by 11% if goods flow into the territory.
Even without additional spending resulting from the war, the PA would face a financing gap, due in part to a fall in donor aid of about $350m this year, the World Bank said.
It said a sustainable Palestinian economic future depended on international budget support for the PA and "sincere efforts" by Israel "to allow better and faster movement of people of goods", while taking into account its "legitimate security concerns".
While restrictions on Palestinians' mobility in the West Bank had been eased, Israel still effectively blocked exports from Gaza the bank said, and Egypt's destruction of smuggling tunnels under the border that had been a conduit for commercial goods as well as weapons had also hit the enclave hard.
