Palestinian Economy
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The economy of Palestine actually refers to the economy of the Palestinian territories that includes West Bank, East Jerusalem and the Gaza strip. A victim of the lack of conclusion to the Middle East peace process, the Palestinian economy has suffered a great deal in last few years, and is in effect a hostage to the Israeli military – and economic – machine.
The economy of Palestine actually refers to the economy of the Palestinian territories that includes West Bank, East Jerusalem and the Gaza strip. A victim of the lack of conclusion to the Middle East peace process, the Palestinian economy has suffered a great deal in last few years, and is in effect a hostage to the Israeli military – and economic – machine.
Compared to Israel, the Palestinian territories are a backwater. There has been considerable growth in the Palestinian industry since some measure of autonomy has been established. However, we need to remember that that growth came from an extremely low base, and since the blockade of Gaza and continued settlement building and security lockdowns, even that lacklustre growth has stalled.
As a measure of its lack of development, the agricultural sector is the largest in Palestine.
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The Economic Situation in the West Bank and Gaza
The standards of living are a little better in the West Bank than in Gaza with a comparatively higher economic growth.
In the 1990s, the occupied territories had about 3,700 companies that employed great number of individuals. All these companies worked for the domestic market that produced food stuffs, tobacco products, beverages.
Palestinian economic prospects are dependant primarily on foreign aid donors, although some sectors have made tentative signs of progress. Remittances from the Palestinian diaspora abroad are also important.
Israel controls the movement of all goods, services, people and finances into and out of the Palestinian territories, and 98% of exports end up in either Israel or Jordan (in which the majority of the population are Palestinian).
Palestinian Unemployment
Palestine GDP rose by 7 percent between 1968-1980 but slowed down after the 80s. During the 1994 Paris Economic Protocal, economic conditions in the West Bank and Gaza deteriorated.
GDP declined 36.1 percent between 1992- 1996 due to falling incomes and population growth, as well as corruption in the ruling Palestine Authority.
Unemployment rates have been a growing problem rising to 20 percent in 1997 from 5 percent in the mid 80s.
However in 1999 with Israel permitting safe passage between the West Bank and the Gaza Strip, economic activity improved in the late 90.
In 2006, the Israeli blockade lead to a rise in unemployment from 23 percent in 2005 to over 50 percent. High unemployment remains a problem for Palestine.
The World Bank estimates that the per capita GDP of Palestine is US$1,036, compared to $22,265 in Israel. Israelis are therefore twenty-two times as rich as Palestinians, on average.
It is hard to imagine a peace in which this tremendous economic inequality starts to be addressed.
Palestinian Economic Statistics at a Glance
GDP per capita (PPP): $12.79 billion (2009 est.)
GDP (official exchange rate): $6.641 billion (2008 est.)
GDP – real growth rate: 7% (2009 est.)
GDP – per capita (PPP): $2,900 (2008 est.)
Unemployment rate: 16.5% (2010 est.)
Source: CIA World Factbook
Total Palestinian Exports: US$558.4 million
Total Palestinian Imports: US$3,466.2 million
Total Re Exports From Palestine:US$168.5 million
Palestinian Net balance Trade: US$2,907.7 million
2008 figures from Palestinian Central Bureau of Statistics
Palestine Economic Forecast
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.
