The World Bank has assisted the Palestinians since the Oslo Accords of the early 1990s – continuing to lay the foundation of a future Palestinian state so that it can deliver services to the people. Grants, financed from the World Bank’s own income and supplemented by Trust Funds contributed by donors, fund the Palestinian Authority’s projects in water and sanitation, municipal, education and social protection sectors.
The lack of progress towards peace and reconciliation creates an unsustainable economic situation. Donor support has significantly declined, and a financing gap persists despite a twenty percent reduction in the total deficit in the first half of 2018. The Palestinian internal polity remains divided between Gaza and the West Bank, with grave uncertainty about the reconciliation process.
Palestinian living standards continued to decline in 2018, with aid flows no longer providing an impetus to growth. The unemployment rate was 32.4 percent in the second quarter of 2018, the highest rate in two decades, while the 2017 poverty rate was 29.2 percent. A recent liquidity squeeze in Gaza has led to a rapid collapse in humanitarian conditions, including access to medical treatment, electricity, and clean water. In Gaza, 54 percent of the labor force is unemployed, including 70 percent among youth. The West Bank and Gaza ranked 114th out of 190 economies in the 2018 Doing Business report—26 spots better from the 2017 ranking (140th).
Last Updated: Oct 11, 2018