World Bank Warns Gaza Economy 'In Free Fall'
25 September 2018 - 7:53PM
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The economy in the Gaza Strip is collapsing, thanks to a
decade-long blockade and other political decisions, and can no
longer be supported by aid flows, the World Bank warned
Tuesday.
"Gaza's economy is in free fall, marking minus 6 percent growth
in the first quarter of 2018 with indications of further
deterioration since then," the global lender said in a report. The
self-governing Palestinian territory's economic situation is
"alarming" with every second person living in poverty and the
unemployment rate for its overwhelmingly young population at over
70 percent, the World Bank report said.
The report will be presented at the bi-annual meeting of the Ad
Hoc Liaison committee on September 27 in New York.
Marina Wes, World Bank Country Director for West Bank and Gaza,
said, "A combination of war, isolation, and internal division has
left Gaza in a crippling economic state and exacerbated the human
distress."
"A situation where people struggle to make ends meet, suffer
from worsening poverty, rising unemployment and deteriorating
public services such as health care, water and sanitation, calls
for urgent, real and sustainable solutions," she added. In addition
to the decade-long blockade, a combination of factors such as the
decision of the Palestinian Authority to reduce the monthly
payments to the area, and the cuts to the international aid to the
region, mainly from the United States, contributed to Gaza's
economic collapse.
"The economic and social situation in Gaza has been declining
for over a decade but has deteriorated exponentially in recent
months and has reached a critical point," Wes said.
"Increased frustration is feeding into the increased tensions
which have already started spilling over into unrest and setting
back the human development of the region's large youth
population."
Meanwhile, the situation in the West Bank is not as dire
currently, the report said. However, the past consumption-driven
growth is faltering and the economy is expected to slow
considerably in the coming period, the World Bank said.
The lender stressed the need for a balanced approach to tackle
the dire situation in Gaza, by combining immediate crisis response
with steps to create an environment for sustainable development.
The report urged the Israel government to create a conducive
environment by lifting trade restrictions and allowing the movement
of people and goods. Further, the Palestinian Authority should
initiate policies and projects needed for sustainable economic
development, including support for trade in digital services, the
World Bank said.
Legitimate institutions should govern Gaza in a transparent and
efficient manner and carry out reforms to create a positive
business environment to support a sustained economic recovery, the
report added. Citing the young and relatively well-educated
Palestinian population, Wes said a renewed emphasis on job creation
will pay off hugely in terms of economic development.
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