World Bank warns Gaza economy is ‘collapsing’

World Bank calls on Israel to ease restrictions on trade and movement of people to halt economic ‘free fall’ in Gaza.

Public servants of the Palestinian Authority queue to receive their salaries outside a bank in Gaza City
Public servants of the Palestinian Authority queue to receive their salaries outside a bank in Gaza City [Mohammed Salem/Reuters]

The economy in the Gaza Strip is “collapsing” mainly due to the 11-year blockade on the coastal enclave in addition to cuts in donor aid, according to a new report from the World Bank.

The report described the economy as being in “free fall”, shrinking by six percent in the first quarter of 2018, and warned of “further deterioration since then”.

It said unemployment in Gaza had reached more than 50 percent, while 70 percent of young people are jobless.


“A combination of war, isolation, and internal rivalries has left Gaza in a crippling economic state and exacerbated the human distress,” said Marina Wes, the World Bank’s director for the region.

“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,” she added.

The report cited a number of factors affecting the strip other than the blockade, such as the Palestinian Authority’s decision to reduce the monthly payments by $30m to the area, the winding down of the $50-60m a year of the United States’ government aid programme, and the cuts to the United Nations Relief and Works Agency (UNRWA) for Palestinian refugees.

The World Bank called on Israel to lift restrictions on trade and movement of goods and people, to help improve Gaza’s economy. It also urged the PA to work on economic development policies and emphasised the need for the development of “legitimate institutions to govern Gaza in a transparent and efficient manner.”

The report was released before a high-level meeting of the bank’s Ad Hoc Liaison Committee, responsible for coordinating development assistance to the Palestinians, on Thursday.

“A situation where people struggle to make ends meet, suffer from worsening poverty, rising unemployment and deteriorating public services such as healthcare, water and sanitation, calls for urgent, real and sustainable solutions,” Wes said.

Palestinians in Gaza have staged near-weekly demonstrations along the fence with Israel since late March, in part to protest the blockade enforced by Israel and Egypt since 2007, when Hamas took control of the territory.

Israeli soldiers have killed at least 174 Palestinians during the weekly protests since March, including 27 minors, according to Gaza’s health ministry. Human rights groups have accused Israel of excessive and unlawful use of force against unarmed protesters.

Source: Al Jazeera, News Agencies