Palestine (Palestinian Territories) Economic Forecast

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Forecasting what will happen with the economy of the Palestinian Territories of the West Bank and Gaza is amongst the most demanding challenges than an economist can face.

It may in fact be easier for geopolitical and military analyst to make.

That is because the economic fortunes of Palestine depend first and foremost on whether a Palestinian state is actually created, under the auspices of the now stalled ‘Two State’ peace process with Israel, and secondly on what the final border, security and logistics arrangements that state will be permitted to have.


Forecasting what will happen with the economy of the Palestinian Territories of the West Bank and Gaza is amongst the most demanding challenges than an economist can face.

It may in fact be easier for geopolitical and military analyst to make.

That is because the economic fortunes of Palestine depend first and foremost on whether a Palestinian state is actually created, under the auspices of the now stalled ‘Two State’ peace process with Israel, and secondly on what the final border, security and logistics arrangements that state will be permitted to have.

The final status discussions with Israel have been a long drawn out affair dogged by mutual suspicion, assassination, military actions and the untimely deaths of leaders.

While the Quartet of the UN, EU Russia and America, through their special envoy former British Prime Minister Tony Blair, was supposed to be prodding both parties into dialogue, it has seemed in recent times intractable.

Cynics would argue that the status quo favoured those in power. The Israelis had secured their borders and could act (mostly) with impunity, as long as the US continued to fund them militarily. The Fatah group in power in the West Bank seem to be enriching themselves with what little money flows into the country, and Hamas have control of Gaza.

Which leaves the Palestinian population with a continued life of violence and discrimination, lack of facilities and very little economic prospects.

The most likely forecast, therefore, is for continued stagnation.

There might be a glimmer of hope for a better life from an unlikely source; the Arab world. Change is sweeping the Middle East, and sooner or later the arabs will have a greater say in their own affairs.

Once that happens, Arab powers, which have by-and-large tacitly supported Israeli policies in return for financial and military aid from the US, while publicly railing against Israel, will no longer be able to play this double again.

If arabs start demanding real change, then Israeli calculus on security may start to change. Helping to create a viable Palestinian state with real economic prospects for its citizens may then become the less risky proposition.

Whether that happens is extremely difficult to predict in this transitionary moment in history.

There is not much accurate data available on the Palestinian economy.

In 2008, the UN estimated that is GDP stood at $6.159 bllion, growing at a 2% annual rate, and with a GDP Per Capita of $1,485.3, making its 4.1 million inhabitants amongst the poorest in the world.

Those figures are unlikely to change significantly in the current scenario.

However, if a state is established, or the economy opened up by some other means, then there could be a period of significant economic growth.

 

 

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The free-spirited family-man internet entrepreneur who fell in love with the study of economics. And congas.