The World Bank’s engagement in the Palestinian territories began in November 1992. Grants, financed from the World Bank’s own resources and supplemented by trust funds contributed by donors, 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.
Conditions in the West Bank and Gaza remain unstable. Political talks are stalled, while the internal divide and movement and access restrictions persist. Economically, the relaxation of the COVID‑19 lockdown measures and the implementation of some Israeli confidence‑building measures supporting economic activity have contributed to a slight recovery. But, despite strong revenues, the fiscal situation remained difficult in 2021 due to the continued decline in donor aid. In 2021, real Gross Domestic Product (GDP) grew by 7%, driven mainly by the West Bank. In Gaza, the May 2021 armed conflict between Israel and the de facto authority in Gaza negatively impacted the economy. It is estimated to have destroyed 2% of Gaza’s capital stock. With an increase in public spending in Gaza and some reconstruction efforts, Gaza’s real GDP growth is estimated at 3.4% in 2021, year‑over-year.
While the near‑term economic outlook indicates some signs of recovery, sustainable sources of growth remain limited. If the current state of play persists, the growth of the Palestinian economy is expected to hover around 3% over 2023–2024. In addition, the war in Ukraine may affect the outlook through mounting inflationary pressure. The pandemic may also add to the risks, especially if no additional vaccines are secured beyond mid‑2022.
Last Updated: May 31, 2022