Despite signs of recovery for the Palestinian economy in the West Bank following the coronavirus pandemic, Gaza’s economy has deteriorated with very high rates of poverty and unemployment.
A new World Bank report shows how poverty is soaring in Gaza where unemployment stands at 45 percent as sustainable sources of growth remain extremely limited.
The report highlights the critical challenges facing the Palestinian economy, economic performance and development needs for Gaza and its deteriorating social conditions.
The poverty rate in the Gaza Strip has risen to 59 percent from 43 percent five years ago due to "very high unemployment and deteriorating social conditions."
"The dire living conditions and the high dependency on social assistance of the people of Gaza is of particular concern," said Kanthan Shankar, World Bank Country Director for the West Bank and Gaza.
“Concerted efforts by all sides are needed to address the needs, and reverse the declining trajectory of Gaza development and quality of life,” added Shankar.
West Bank recovery
There are signs of economic recovery in the occupied West Bank — mostly due to reopening after the pandemic — with an unemployment rate of around 17 percent, according to the report. It points out that the "Palestinian Authority's fiscal situation remains very challenging" and warning it was "no longer able to borrow from domestic banks."
The PA's deficit is expected to reach $1.36 billion in 2021, it added.
The Bank projected a slow in growth in all Palestinian territories — around 3 percent in 2022 compared with 6 percent in 2021.
The World Bank called on donors "to help reduce the budget deficit" and for the "systematic transfer" of revenues Israel raises from businesses operating in the so-called Area C of the West Bank, where Israel holds full control under the 1995 Oslo Accords.
Crippled local economy
Since June 2007, two million Palestinians have been living under a prolonged blockade inside the densely populated Gaza, enduring four military conflicts since 2008.
Many factors have crippled the local economy and made the vast majority of the Gazan population dependent on external humanitarian assistance to survive.
"It is not surprising to see the skyrocketing rates of poverty and unemployment in Gaza compared with recent years. The overall humanitarian situation in Gaza has been steadily declining due to a wide range of reasons, including decades of Israeli occupation and blockade, repeated rounds of large-scale military operations, internal political conflict, not to mention the Covid-19 pandemic,” Ahmed Azzam, an aid worker from Gaza, told TRT World.
"The available humanitarian assistance does not amount to nearly half what is needed to help people live a decent life with dignity according to the United Nations. The increased social pressure has also resulted in increased levels of domestic violence, gender-based violence, suicide, and also increased the number of people in need for specialised mental health services," Azzam explained.
In 2021, more than 20,000 households fell into poverty as a result of the latest escalation while an additional 30,000 households have become poor due to Covid-19 restrictions, according to the local Ministry of Labour.
"This has led families to rely on negative coping mechanisms to survive. For example, I have seen families reducing the number of meals they eat per day, or drastically reducing the quality of nutritious food they can get. Other families have cut expenses of essential hygiene products to prioritise food," Azzam explained.
In addition to Israel's Gaza policy, many Palestinians blame political divisions between the main two Palestinian parties Fatah and Hamas. Fatah leads the Palestinian Authority in the West Bank and Hamas is in control of Gaza.
“The Palestinian division has badly affected youth in Gaza who became fragile and dependent of humanitarian aid. The division weakens efforts in confronting the blockade and the pandemic which complicated the humanitarian need while funds are in decrease,” Amjad Al Shawa, Director of Palestinian NGOs' Network in Gaza, told TRT World.
“Unemployment rate among youth is 70 percent and the coronavirus pandemic has rubbed salt into the wound,” Al Shawa added. “The solution for the current economic situation is rather a political one through lifting the blockade and restrictions on Palestinians.”
Shawa adds that 93 percent of Palestinian youth registered to vote in the parliamentary elections indicating that the youth “seek change and democracy.”
Elections empower Palestinians
Palestinians were hoping that elections would help mend years of bitter divisions that crippled the lives of Gazans. But parliamentary elections were postponed by President Abbas last April while waiting for the Israeli green light to allow Palestinians to vote in Israeli-occupied East Jerusalem.
The way out for Gaza’s current challenges would be elections.
“The return of democracy in the Palestinian arena with the participation of youth could unify the effort toward resolving all these problems. The Palestinian position will be stronger when calling for a real end of the blockade reflecting on positive change for our community,” Al Shawa explains.
Society-wide participation, an active legislative council and a unified government would work on a comprehensive vision that can revive the economy, Al Shawa adds.