Econostrum | Economic News in the Mediterranean

The UNCTAD is alarmed by the increase in unemployment and poverty in Palestine

Written by Frédéric Dubessy on Thursday, September 15th 2022 à 17:45 | Read 1707 times

Food insecurity reaches new heights in Palestine (photo: UNICEF-SoP/Noorani)
Food insecurity reaches new heights in Palestine (photo: UNICEF-SoP/Noorani)
PALESTINE. In its latest report on its assistance program to the Palestinian people, the United Nations Conference on Trade and Development (UNCTAD) reveals that 36% of the Palestinian population was living below the poverty line at the end of 2021.

Released on Wednesday, September 14, 2022, this document reveals that food insecurity has increased, between the end of 2020 and the end of 2021, from 9% to 23% in the West Bank and from 50% to 53% in Gaza.

UNCTAD "urges the international community to provide adequate and predictable financial support to the Palestinian people to alleviate their suffering and prevent the deepening of an already deep socio-economic crisis."

While the Palestinian economy grew by 7.1% in 2021, it did not make up for the 11.3% contraction in 2020 with the pandemic. Unemployment continues to rise, averaging 26% across the territories. It stands at 54% for women and 30% for men in Gaza, which has been under an Israeli blockade since 2007.
Here, 83% of workers' salaries remain below the minimum wage and 80% of the population depends on international aid.

Donor aid down to $317 million from $2 billion

Despite budgetary reforms - the deficit has fallen from 23.9% of GDP in 2007 to 5.6% in 2021 - the Palestinian Authority has been suffering one of the deepest crises in its history for two years. UNCTAD points to "a significant financing gap and a sharp decline in foreign aid. In 2021, overall donor support has fallen to $317 million, or 1.8% of GDP, "a staggering drop from $2 billion, or 27% of GDP, in 2008," the UN agency said. At the same time, "budgetary aid has halved compared to 2020, amounting to $186 million, or only 1% of GDP, compared to 24% in 2008. At the same time, development aid has fallen from a peak of 10.6% in 2000 to a meager 0.73% in 2021.

The document also notes that "the occupying power controls more than two-thirds of Palestinian tax revenues, which it can (and often does) suspend and/or apply large arbitrary deductions before transferring the rest. According to a statement, "Gaza is caught in a perpetual vicious cycle where interventions by the international community and donors are generally limited to emergency humanitarian and rehabilitation activities, leaving few resources for sustainable recovery and addressing long-term development needs.

In January 2022, in his address to the UN Security Council, Tor Wennesland described the Palestinian Authority's fiscal situation as "dire" and said it "threatens its stability. The UN Special Envoy to the Middle East called for "an end to the Israeli occupation and the achievement of a two-state solution", but also for "political and economic reforms (...) to ensure the Palestinian Authority's ability to function effectively, while building donor confidence and support".

Israel accounts for 72% of total Palestinian imports and exports

The new UNCTAD report further states that "the ability of the Palestinian government to respond effectively to the Covid-19 shock has been systematically hampered by the occupation, which deprives it of the policy tools and fiscal and monetary space available to other governments.

It also states that "if the status quo is maintained - with continued occupation and declining donor support - GDP growth will struggle to keep up with population growth. It was still 5.1% below its pre-Covid-19 level in 2021. "Its slow recovery is unevenly concentrated in the West Bank. Gaza continues to lag behind and inequalities between the two Palestinian regions are widening," the paper said.

The Palestinian territories are dependent on imports and limited and undiversified exports. Ten labor-intensive products account for two-thirds of total exports. Palestine has recorded "a massive trade deficit of 37% of GDP in 2021. One of the highest in the world, according to UNCTAD, which attributes it to "a trade dependence on Israel, which accounts for 72% of total Palestinian imports and exports that same year.

In November 2020, the United Nations Conference on Trade and Development estimated at $ 16.7 billion in ten years (2007 to 2018) the cost of the Israeli occupation in Gaza and calculated that without it, the GDP of this territory would be 50% higher.

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