UNCTAD Releases Report on Assistance to Palestinian People

The Palestinian economy experienced marginal improvements in 2009, but continued to perform well below potential with high unemployment, according to the UN Conference on Trade and Development (UNCTAD) annual report on assistance to the Palestinian people.

“While the economy grew by 6.8 percent in 2009 we have some concern about its sustainability,” said Mahmoud A.T. Elkhafif, the UN Conference on Trade and Development’s Coordinator of Assistance to the Palestinian People.

"Over the last 10 years, the income per capita, or GDP per capita, is 30 percent below what the Palestinian, average Palestinian used to have 10 years ago.  So, when we say 6.8 percent growth, that seems O.K., but when we see that there is a 30 percent decline in real GDP per capita, that is an alarming figure," said Elkhafif. "When we also see that 30 percent of the Palestinian in the West Bank and Gaza are unemployed, that is also alarming."

The UN Conference on Trade and Development’s Annual Report on Assistance to the Palestinian People, released Tuesday (31 August), found that the direct and indirect costs of the Israeli blockade on Gaza, closure of the West Bank and 2008-2009 war in Gaza adds up to over $3 billion over the last three years, reported The Media Line.

While the Palestinian Authority has been painting a picture of economic growth and independence, under Prime Minister Salam Fayyad, in the preparation for a Palestinian state, those in Gaza are very much reliant upon a tunnel economy for goods and sales. Unemployment rate of nearly 40 per cent in Gaza is among the highest in the world.

“Basically the Palestinian economy has lost a third of its productive base that was there 10 years ago,” Elkhafif said. “Without getting that productive base back, the economy won’t be able to expand and the Palestinian economy will depend on imports, mainly from Israel.”

"But, what is more alarming is the extreme dependency on the Israeli economy.  Three-quarters of the Palestinian trade is with Israel," Elkhafif said.  "As a result ... the total Palestinian trade deficit with Israel was about $2.6 billion in 2009.  This is about seven-percent higher than the $2.4 billion received by the Occupied Palestinian Territory from the International Community."

According to the Palestinian Central Bureau of Statistics, 90 percent of Palestinian trade in 2008 was with Israel. The Palestinian trade deficit worsened from 57 per cent of GDP in 2008 to 59 percent in 2009, according to the Palestinian news agency WAFA. Earlier this year, the Palestinian Authority recently began a boycott campaign against goods produced in Israeli settlements, and the Boycott, Divestment and Sanctions Campaign (BDS) might help further Palestinian independence from the Israeli market.

The Occupied Palestinian Territory has has an annual trade deficit of $2.6 billion with Israel, as a result of higher import than export rates. The $2.6 billion figure exceeds the value of all international financial support received in the Palestinian Territories, reported The Media Line. In June 2010, and a Palestinian Investment Conference held in Bethlehem, France, Italy, and the United States pledged a combined $655 million for development in the Palestinian private sector.

“To get the economy back we need to rebuild and expand the productive base in various sectors and give incentive for the private sector to participate,” Elkhafif said. We also need to lower the transaction costs in the Palestinian territories for both imports and exports, which are extremely high because of the closure and the blockade and all the checkpoints.”