| Economy of Palestinian Territories[1][2] | |
|---|---|
Bank Of Palestine, Ramallah |
|
| Currency | New Israeli Shekel (NIS) alongside: - Egyptian Pound (EGP), in Gaza Strip - Jordanian Dinar (JOD), in West Bank |
| Fiscal year | Calendar Year |
| Statistics | |
| GDP | $12.95 billion (2009 est.) |
| GDP growth | 8% (2009 est.) |
| GDP per capita | $2,900 (2008 est.) |
| GDP by sector | agriculture (5%), industry (14%), services (81%) (2008 est.) |
| Inflation (CPI) | 9.9% (2009 est.) |
| Population below poverty line |
46% (2007 est.) |
| Labour force | 872 Thousand (2006) |
| Labour force by occupation |
Agriculture (12%), Industry (23%), Services (65%) (2008 est.) |
| Unemployment | 16.5% (2010 est.) |
| Main industries | Cement, Quarrying, Textiles, Soap, Olive-Wood Carvings, Mother-of-Pearl Souvenirs, Food Processing |
| Ease of Doing Business Rank | 135th[3] |
| External | |
| Exports | $529 million f.o.b. (2008) |
| Export goods | Olives, Fruit, Vegetables, Limestone, Citrus, Flowers, Textiles |
| Imports | $3.772 billion c.i.f. (2008) |
| Import goods | Food, Consumer Goods, Construction Materials |
| Public finances | |
| Revenues | $1.87 billion (2010 est.) |
| Expenses | $3.1 billion (2008 est.) |
| All values, unless otherwise stated, are in US dollars | |
The economy of the Palestinian territories refers to the economy of the territories under the administration of the Palestinian Authority in the West Bank and the Gaza Strip.
Contents |
GDP per capita in the Israeli-occupied Palestinian territories rose by 7% per year from 1968-1980 but slowed during the 1980s. Between 1970 and 1991 life expectancy rose from 56 to 66 years, infant mortality per 1,000 fell from 95 to 42, the percentage of households with electricity rose from 30% to 85%, the percentage of households with safe water rose from 15% to 90%, the percentage of households with a refrigerator rose from 11% to 85%, and the percentage of households with a washing machine rose from 23% in 1980 to 61% in 1991.[4]
Economic conditions in the West Bank and Gaza, where economic activity was governed by the Paris Economic Protocol of April 1994 between Israel and the Palestinian Authority, deteriorated in the early 1990s. Real per capita GDP for the West Bank and Gaza Strip (WBGS) declined 36.1% between 1992 and 1996 owing to the combined effect of falling aggregate incomes and robust population growth. The downturn in economic activity was due to extensive corruption in the newly governing Palestinian Authority, and to Israeli closure policies in response to security incidents in Israel, which disrupted previously established labor and commodity market relationships.
The most serious effect of this downturn was the emergence of chronic unemployment. Average unemployment rates in the 1980s were generally under 5%; by the mid-1990s this level had risen to over 20%. After 1997, Israel's use of comprehensive closures decreased and new policies were implemented. In October 1999, Israel permitted the opening of a safe passage between the West Bank and the Gaza Strip in accordance with the 1995 Interim Agreement. These changes in the conduct of economic activity fueled a moderate economic recovery in 1998-99.
In 2006, unemployment rose from 23% in 2005 to over 50%. As a result of the Israeli blockade, 85 percent of factories were shut or operating at less than 20 percent capacity. It is estimated that Israeli businesses lost $2 million a day from the closing while Gaza was losing approximately $1 million a day.[5] The World Bank estimates the nominal GDP of the territories at 4,007,000 US$ and of Israel at 161,822,000 US$. Per capita these numbers are respectively 1,036 US$ and 22,563 US$ per year.
For 30 years, Israel permitted thousands of Palestinians to enter the country each day to work in construction, agriculture and other blue-collar jobs. Until the mid-1990s, up to 150,000 people—about a fifth of the Palestinian labor force—entered Israel each day. After Palestinians unleashed a wave of suicide bombings, the idea of separation from the Palestinians took root in Israel. Israel found itself starved for labor, and gradually replaced most of the Palestinians with migrants from Thailand, Romania and elsewhere.[6][7]
In 2005, the PNA Ministry of Finance cited the Israeli West Bank barrier, whose construction began in the second half of 2002, as one reason for the depressed Palestinian economic activity.[8] Real GDP growth in the West Bank declined substantially in 2000, 2001, and 2002, and increased modestly in 2003 and 2004.[9] The World Bank attributed the modest economic growth since 2003 to "diminished levels of violence, fewer curfews, and more predictable (albeit still intense) closures, as well as adaptation by Palestinian business to the contours of a constrained West Bank economy". Under a "disengagement scenario" the Bank predicted a real growth rate of -0.2% in 2006 and -0.6% in 2007.[10]
In the wake of Israel's unilateral disengagement from Gaza, there were shortages of bread and basic supplies due to closure of the al Mentar/Karni border-crossing into Israel. Israel's offer to open other crossings was turned down by the Hamas-run Palestinian authority.[11]
Following the January 2006 legislative elections, won by Hamas, the Quartet (apart from Russia) cut all funds to the Palestinian Authority led by prime minister Ismail Haniyah (Hamas). The Palestinian Authority had a monthly cash deficit of $60 million-$70 million after it received $50 million-$55 million a month from Israel in taxes and customs duties collected by Israeli officials at the borders. After the elections, the Palestinian stock market fell about 20 percent, and the Palestinian Authority exhausted its borrowing capacity with local banks.[12] Israel ceased transferring $55 million in tax receipts to the Palestinian Authority. These funds accounted for a third of the PA's budget and paid the wages of 160,000 Palestinian civil servants (among them 60 000 security and police officers). The United States and the European Union halted direct aid to the PA, while the US imposed a financial blockade on PA's banks, impeding some of the Arab League's funds (e.g. Saudi Arabia and Qatar) from being transferred.[13] In May 2006, hundreds of Palestinians demonstrated in Gaza and the West Bank demanding payment of their wages. Tension between Hamas and Fatah rose as a result of this "economic squeeze" on the PA.[14]
In 2007, the economy in the West Bank improved gradually. Economic growth for the occupied areas reached about 4-5% and unemployment dropped about 3%. Israeli figures indicated that wages in the West Bank rose more than 20% in 2008 and trade rose about 35%. Tourism in Bethlehem increased to about twice its previous levels, and tourism increased by 50% in Jericho.[15] Life expectancy is 73.4, placing the territories 77th in the world, compared with a life expectancy of 72.5 in Jordan, and 71.8 in Turkey.[16]
The International Monetary Fund report for the West Bank forecast a 7 percent growth rate for 2009. Car sales in 2008 were double those of 2007. The first planned Palestinian city named Rawabi will be built north of Ramallah, with the help of funds from Qatar.[17] The Israeli military removed its checkpoint at the entrance of Jenin in a series of reductions in security measures.[18]
International businesses based in the West Bank are expected to benefit from a state of the art web-based system for tracking goods coming in and out of the area, launched in August 2009 by Palestinian customs in partnership with the United Nations Conference on Trade and Development.[19]
The Bethlehem Small Enterprise Center opened in early 2008. Funded by Germany, the center has helped to promote computer literacy and marketing skills.[15]
Olives of Peace is a joint Israeli-Palestinian business venture to sell olive oil. Through this project, Israelis and Palestinians have carried out joint training sessions and planning. [20] The oil is sold under the brand name "Olives of Peace." [21]
In 2009, efforts continued to build Palestinian local institutions and governments from the ground up. Much of this work was done by Tony Blair and U.S. General Keith Dayton. Some analysts saw this as a more substantial way to lay a groundwork for viable institutions and for local peace.[22]
Joint economic cooperation between Israeli officials in Gilboa and Palestinian officials in Jenin has begun to have major results and benefits. In October 2009, a new project got underway promoting tourism and travel between the two areas. New business efforts and tourist attractions have been initiated in Jenin.[23] The two regions are planning a joint industrial zone which would bridge the border. Palestinians would produce locally-made handicrafts and sell them through Gilboa to other regions of the world. Another possible project is a joint language center, where Israelis and Palestinians would teach each other Arabic and Hebrew, as well as aspects of their cultural heritage. [24]
In 2009, an economic "boom" began with growth reaching 8 percent, higher than in Israel or the West. However, with inflation around 9.9% that same year, real economic growth is actually negative insofar as purchasing power has decreased. Tourism to Bethlehem, which had doubled to 1 million in 2008, rose to nearly 1.5 million in 2009. New car imports increased by 44 percent. New shopping malls opened in Jenin and Nablus. As an outcome of the Palestine Investment Conference, Palestinian developers are planning to build the first modern Palestinian city, Rawabi.[25][26]
In 2010, Ramallah was described as a hub of the economic activity thanks to the improved security situation, successful battle against corruption and large consumer base. [27]
Stonecutting is a major source of income for the Palestinian economy. The annual average output per worker in the stone industry is higher than in any other sector. There are 650 stone production outlets in the West Bank, 138 of them in Beit Fajjar. The quarried material is cut into a rich range of pink, sand, golden, and off-white bricks and tiles known as Jerusalem stone. [28]
The West Bank and Gaza economies have become heavily reliant on foreign aid which stood at 1.8 billion in 2008. Approximately 30% of the GDP, or US$487 per Palestinian per year is aid. Foreign aid provides essential services for nearly half of the Palestinian people, and allows the Palestinian Authority to operate and pay its estimated 140,000 employees.[29]
In 2010, Arab states cut financial aid to the Palestinian Authority. According to the Palestinian Finance Ministry, the PA received $583.5 million in budget support by August 2010, of which only 22 percent came from Arab states. The remainder was from international donors, including the European Union and the United States. Salah Rafat, a member of the PLO Executive Committee, urged the Arab countries to honor their financial pledges.[30]
Since 2010, Israeli high-tech companies have begun to employ Palestinian engineers. To date, most of them are outsourced workers, but Mellanox, a computer hardware firm, plans to hire 15-20 Palestinian engineers as regular employees.[31]
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