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UNCTAD is alarmed at the economic repercussions of the Covid on an already bled Palestine

Written by Frédéric Dubessy on Wednesday, September 9th 2020 à 18:00 | Read 506 times

PALESTINE. In a report, the United Nations Conference on Trade and Development (UNCTAD) notes the aggravation, by the Covid-19 - which arrived locally at the beginning of March 2020 - of the already disastrous economic conditions in the Palestinian territories. "The long-standing occupation and conflict have made the Palestinian economy vulnerable to shocks," notes the seventeen-page text in French and English released on Tuesday, 8 September 2020.

"The pandemic has struck at a particularly painful time for the Occupied Palestinian Territory. Even before it struck, the forecasts for the Palestinian economy in 2020 and 2021 were already gloomy, with GDP per capita expected to fall by 3 to 4.5%", the report says. Already in 2019, real GDP grew by less than one percentage point, while the West Bank recorded its lowest growth rate since 2012 (1.15%) and growth in the Gaza Strip was almost zero. In the same year, the unemployment rate reached 43% in Gaza (64% among young people) while more than half of the population lives below the poverty line ($4.6 per day).

80% of Gaza's population depends on international aid

Growth rates of real GDP and gross GDP per capita in Palestine (source UNCTAD)
Growth rates of real GDP and gross GDP per capita in Palestine (source UNCTAD)
According to UNCTAD, "restrictions and withholdings on fiscal resources continue to undermine the Palestinian economy". The Geneva-based organization estimates the annual loss of Palestinian tax resources to the Israeli treasury at 3.7 percent of GDP, or 17.8 percent of total tax revenues. In March 2020, "a new annual deduction of $144 million was applied to Palestinian customs revenues - equivalent to payments made by the Palestinian National Authority (PNA) to the families of Palestinians held in Israeli prisons or killed in attacks or alleged attacks against Israelis," the report says. At the same time, donor support to the Palestinian National Authority (PNA) has increased from 32% of GDP in 2008 to 3.5% in 2019. However, 80% of the population in Gaza depends on international aid for food security, hygiene, medical care, electricity and drinking water.
With the continued loss of land and access to water, the agricultural sector's share of GDP has fallen from 35% in 1972 to 4% in recent years.

"Barely a month after the epidemic, the revenues received by the PNA from trade, tourism and transfers reached their lowest level in 20 years. The fiscal impact is aggravated by the additional expenditure on health, social protection and support to the private sector made necessary by the pandemic," UNCTAD experts note. The economic loss could reach 7 to 35% of GDP depending on the forecast assumptions on the severity and duration of the pandemic.

The very existence of the Palestinian Authority threatened

Main economic indicators in the Palestinian Territories (source: UNCTAD report)
Main economic indicators in the Palestinian Territories (source: UNCTAD report)
Mukhisa Kituyi, Secretary-General of UNCTAD, therefore sounds the alarm: "The international community should urgently redouble its efforts to support the Palestinian people and thus enable them to cope with the negative economic effects of the pandemic. There is no alternative to donor support to ensure the survival of the Palestinian economy".

The report further states that "the Palestinian Authority does not have the means to deal with the broad economic impact of the Covid-19 pandemic. Nor would it be able to cope with a return to the same or any other kind of situation. Its capacity to respond to sudden crises has been reduced over time by the occupation and by the lack of policy space and conventional means of economic policy to manage shocks. It has little access to external borrowing and very limited fiscal space; it has no national currency and no independent monetary policy. There is therefore an urgent need for international action to enable the Palestinian Authority and the Palestinian people to cope with the Covid-19 pandemic".

UNCTAD fears that "if current developments continue, the deterioration of the Palestinian economy will threaten the very existence of the Palestinian Authority". It therefore proclaims "the urgency of ending the occupation so that the Palestinian people are able to cope with emergencies that are bound to recur in the future".

Lire le rapport de la Cnuced "Evolution de l'économie du Territoire Palestinien Occupé" en français

Read the Cnuced report "Developments in the economy of the Occupied Palestinian Territory" in english

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