In their annual economic forecast report for 2017, the Palestine Monetary Authority (PMA) predicted sluggish growth for the Palestinian economy to continue into 2017, mainly due to the crippling effects of the Israeli occupation of the Palestinian territory.
“Despite annual real growth rates of approximately 3 percent over the past few years, a slackening trend of economic growth remains evident,” PMA wrote in the report, which was released this week.
A report released by the World Bank in September had also said the Palestinian economy remained “worrying” as growth stagnation, delays in aid delivery, and Israeli restrictions continue to seriously impede improvements to the financial situation.
PMA attributed the dire condition of the Palestinian economy to political and geographic divisions between the occupied West Bank and the Gaza Strip, Israeli measures in the occupied territory and their “adverse impact on investor confidence,” as well as a sluggish private sector.
The report also pointed to the impact of Israel’s expansion of illegal settlements in the West Bank and East Jerusalem, as well as Israeli restrictions imposed on Area C — the more than 60 percent of the West Bank under full Israeli military control.
PMA also highlighted Israel’s ongoing siege of the Gaza Strip as a major hindrance to economic growth, as well as Egypt’s closure of the Rafah crossing that seals Palestinians inside the blockaded territory.
PMA predicted real GDP growth of 3.1 percent to about $8,221 million for 2017, as well as an increase in real per capita income (real GDP per capita) by 0.8 percent to $1,776.
The authority said that their forecast suggested GDP growth would mainly be supported by an increase in Palestinian workers in Israel, an increase in private consumption financed by indebtedness and banking loans, alongside “modest growth” in gross investment, “owing in particular to investment derived from the reconstruction of Gaza Strip, albeit rather slowly.”
Total consumption expenditure is expected to rise by 4.1 percent (3.7 percent for private consumption and 5.7 percent for public consumption), with a slight rise (0.8 percent) expected in total investment spending.
PMA’s forecast suggested exports could grow by 2.2 percent, while imports are expected to rise by 3.6 percent due to strengthening consumption rates. As a result, the trade balance deficit is predicted to widen by about 4.4 percent.
“It is unlikely that this predicted positive growth will exert any significantly positive impact on job opportunities and employment, with the unemployment rate in Palestine expected to continue to rise to about 27.6 percent of total labor force in 2017,” the report said.
The dim outlook for the Palestinian economy came as the Palestinian Central Bureau of Statistics (PCBS) released its year-end report that counted 4.88 million Palestinians living in the occupied Palestinian territory — around 2.97 in the occupied West Bank and 1.91 million in Gaza Strip.
A further 1.53 million were said to be in Israel while some 5.59 million live in Arab countries and around 69,000 in other foreign countries.
Palestinian refugees make up 41.9 percent of the Palestinian population in the occupied territory — 26.0 percent of them in the West Bank and 66.7 percent in Gaza Strip.
The report noted that the number of Palestinians in historical Palestine — which includes present-day Israel and the occupied territory — will exceed the number of Israelis over time.
The number of Palestinians in historical Palestine totaled 6.41 million at the end of 2016 while the Israeli Central Bureau of Statistics said the number of Israelis is expected to reach 6.45 million.
According to PCBS, the number of Palestinians and Israelis will be equal at the end of 2017, while by 2020 there will be 7.12 million Palestinians compared to 6.96 million Israelis.