WASHINGTON, May 23, 2024 – The World Bank has issued its latest update on The Impact of the Conflict in the Middle East on the Palestinian Economy. The report draws on the latest available data and analysis to assess the ongoing impact of the conflict to the Palestinian economy.
It finds that the fiscal situation of the Palestinian Authority has dramatically worsened in the last three months, significantly raising the risk of a fiscal collapse. Revenue streams have largely dried up due to the drastic reduction in clearance revenue transfers payable to the Palestinian Authority and a massive drop in economic activity. The rapidly widening gap between the amount of revenues coming in, and the amount needed to finance essential public expenditure, is driving a fiscal crisis.
As of the end of 2023, this financing gap reached US$682 million. This gap is projected to double within the coming months, reaching up to US$1.2 billion. Increased foreign assistance and the accumulation of further arrears to public employees and suppliers are the only available financing options for the Palestinian Authority.
Close to half a million jobs have been lost in the Palestinian economy since October 2023. This includes an estimated loss of 200,000 jobs in the Gaza Strip, 144,000 jobs in the West Bank, and that of 148,000 cross-border commuters from the West Bank to the Israeli labor market.
The report takes a close look at different dimensions of poverty of the Palestinian people. Drawing on new official 2023 data, the World Bank was able to assess poverty rates across all Palestinian households, broken down by geographic location. The findings focus on data available at the mid-point of 2023 and show that poverty was significantly increasing prior to October 2023.
The overall poverty rate of Palestinians stood at 32.8% in mid-2023. Wide differences are found between the West Bank and Gaza. In Gaza, the poverty rate stood at close to 64%. In the West Bank, it was around 12%. Compared to the last poverty analysis conducted in 2017, poverty in the Palestinian territories had increased by 3.7 percentage points. At present, nearly every Gazan lives in poverty.
The research also looked at GDP per capita. In 2023 it stood at $3,360, a 12% drop from 2022. For Gaza alone, there was a 28% drop. The per capita income in Gaza was about a fifth of that in the West Bank. In 2023 Gaza’s per capita real income was the lowest ever recorded.
The Palestinian economy continues to be under a massive shock in the first months of 2024. While the outlook for 2024 remains highly uncertain, a further economic contraction of anywhere between 6.5 and 9.6% is projected.
