The World Bank began its program of assistance in the Palestinian territories in November 1992. Grants, financed from the World Bank’s own resources and supplemented by co-financing from development partners, fund the Palestinian Authority’s (PA) projects in water, energy, urban and local development, social protection, education, health, solid waste management, digital development, financial sector, and private sector development.
The peace talks between the Palestinians and Israelis remain stalled, and little progress has been made in reconciliation between the polities of Gaza and the West Bank. Movement and access restrictions continue to limit Palestinian development in the West Bank while Gaza remains a nearly closed economy with very high unemployment levels of about 44 percent in Q2 2022.
Overall, the Palestinian economy continued to rebound from the pandemic shock in Q1 2022, although at a slower rate than in 2021. Real Gross Domestic Product (GDP) growth reached 5.7%, year-on-year in Q1 2022, driven by increased private consumption, continued easing of COVID-19 restrictions, and an increase in the number of Palestinians working in Israel. Despite a boost in revenues, fiscal conditions are expected to remain tight in 2022.
Regarding the economic outlook, downside risks remain elevated. Growth is projected to soften during 2022 and GDP is expected to reach 3.5 percent. If the war in Ukraine further strains supply chains and has a larger than expected impact on the prices of food and energy, households could experience as much as 80% increases in the cost of bread, flour, and vegetable oil between January 2022 and January 2023—which would negatively impact the outlook—as would an escalation of clashes between Palestinian and Israeli forces.
Last Updated: Oct 10, 2022