Unemployment in Palestine was the highest in the world in 2017, at 27.4 percent, while half of Palestinians under 30 were unemployed.
Palestinian citizens are trapped in an economy of jobless growth with no prospects, especially in Gaza, which is undergoing "de-development", the United Nations trade and development agency UNCTAD said in an annual report published on Wednesday.
It said unemployment in Palestine was the highest in the world in 2017, at 27.4 percent, while agricultural production fell by 11 percent. Half of Palestinians under 30 were unemployed. The economy grew 3.1 percent but was flat on a per capita basis.
“Every year the situation becomes more and more unacceptable and difficult,” UNCTAD Deputy Secretary-General Isabelle Durant told a news conference in Geneva, describing the economic situation as "absolutely unsustainable".
A customs union between Israel and Palestine has isolated the Palestinian economy from the rest of the world and left it dependent on Israel, the report said.
“The major reason for this dark situation from the economic development point of view is a set of Israeli restrictions," Mahmoud Elkhafif, coordinator of the report, said.
"These measures include permit systems for Palestinians to work in Israel, you have road blocks in the West Bank, you have earth mounds, trenches, road checkpoints, gates and separation barriers.”
In Gaza, where real incomes have fallen 30 percent since 1999 and production capacity has been hit by successive military operations, households got an average of two hours of electricity daily, and only about 10 percent had drinking water.
"It is de-development, it is not development," Elkhafif said.
Israel withdrew its troops and settlers from Gaza in 2005, but, citing security concerns, maintains tight control of its land and sea borders.
Hamas, deemed to be a terrorist organisation by Israel, has controlled Gaza since 2007.
Egypt also restricts movement in and out of Gaza on its border.
Mahmoud Abbas’s Palestinian Authority in the West Bank has also sought to use financial measures to isolate Hamas, last year slashing the salaries of thousands of government workers in Gaza by 30 percent.
Total international support dropped significantly, from $2 billion in 2008 to $720 million in 2017.
A further blow came this month when US President Donald Trump halted funding for the UN Palestinian refugee agency UNRWA, leaving a $200 million gap.
Durant said it was too early to assess the impact of the US move, and she hoped European or other donors might at least partially make up the shortfall.