World Bank Expects Palestine's Economy to Contract between 6.5%-9.6% in 2024

The World Bank expects the Palestinian economy to contract between 6.5% and 9.6% in 2024, with the continuing repercussions of the war that broke out between Israel and Hamas on October 7, 2023.

In a recent report, the World Bank said that the Palestinian economy has lost about half a million jobs since last October, including about 200,000 jobs in the Gaza Strip, 144,000 jobs in the West Bank, and 148,000 workers moving across the border from the West Bank to the labor market. Israeli.

Regarding the poverty rate among Palestinians, the report stated that it reached 32.8% in mid-2023, in light of wide disparities between the West Bank and Gaza Strip, where it recorded about 12% and 64%, respectively. Compared to the last analysis conducted in 2017 regarding poverty conditions, the rate in the Palestinian territories increased by 3.7%.

At present, almost all Gazans live in poverty, according to the report. Per capita GDP fell 12% on an annual basis in 2023 to $3,360. As for the Gaza Strip alone, there was a decline of 28%. The per capita income in Gaza is about one-fifth of that in the West Bank. In 2023, the real per capita income in the Gaza Strip was the lowest ever, according to the report.

The World Bank, in its report, said that the public financial situation of the Palestinian Authority has deteriorated severely in the past three months, which greatly increases the risk of a collapse in public finances.

Revenue flows have largely dried up due to the sharp decline in transfers of clearing revenues payable to the Palestinian Authority and the massive decline in economic activity, and the rapidly widening gap between the volume of revenues and expenditures to finance minimum public spending is leading to a public finance crisis.

At the end of 2023, the Palestinian Authority’s financing gap amounted to $682 million, and it is expected to double in the coming months to $1.2 billion.

The report considered the increase in foreign aid and the accumulation of arrears due to public employees and suppliers as the only financing options available to the Palestinian Authority.

On April 2, a report issued by the World Bank and the United Nations, with financial support from the European Union, stated that the cost of damage to vital infrastructure in Gaza was estimated at approximately $18.5 billion, equivalent to 97% of the gross domestic product of the West Bank and Gaza Strip combined in 2022.

The report indicated at the time that more than half of Gaza's population was on the brink of famine, and the entire population was suffering from severe food insecurity and malnutrition. There were more than a million people homeless, and 75% of the Gaza Strip's population had been displaced.

In December 2023, the World Bank Group agreed to provide $35 million to development partners active in Gaza, including UNICEF, the World Food Program, and the World Health Organization.

This includes a $10 million package to the World Food Program to purchase food vouchers and baskets for delivery to about 377,000 people.

The long-term cost of rebuilding Gaza after the war between Israel and Hamas reaches $50 billion, and will take nearly two decades, according to United Nations estimates.