With Israel's planned annexation of the West Bank, in contravention of international law, only weeks away, the World Bank and the United Nations have issued stark warnings concerning the Palestinian economy, blighted by the longest occupation in modern times and the spread of the coronavirus pandemic.
The number of Palestinians living below the poverty line is expected to double according to the World Bank; increasing to 30 per cent from the current rate of 14 per cent. "Even prior to the Coronavirus pandemic, more than a quarter of Palestinians lived below the poverty line," said the World Bank. "The share of poor households is now expected to increase to 30% in the West Bank and to 64% in Gaza."
More striking is the youth unemployment rate which is said to be 38 per cent, well beyond the Middle East and North Africa's regional average. According to the World Bank, the Palestinian economy is being suffocated by restrictions imposed by Israel on the movement of people and goods.
The United Nations has also echoed concerns raised by the World Bank, warning that the move by Prime Minister Benjamin Netanyahu's government would stifle financial and aid flows to the Palestinians and "most likely trigger conflict".
The UN said that "the achievements of the Palestinian government over the last quarter century will fade" adding that "the peace and security situation will worsen, and a hardened and more extremist politics on both sides will inevitably result."
The Palestinian territories have seen low infection rates after acting quickly to curtail the spread of COVID-19, with three deaths out of 450 cases registered among some five million residents in Gaza and the West Bank. Nonetheless the Palestinian economy is expected to shrink by as much as 11 per cent in the coming year.
The Palestinian economy grew by just one per cent in 2019 and is projected to shrink by as much as 11 per cent this year. The shrinking of the economy is expected to be compounded further by the funding gap in the PA's budget which is predicted to be over $1.5 billion this year, up from $800 million in 2019.
The World Bank suggested that one way to prevent an "economic collapse" would be to develop a digital economy. "The digital economy can overcome geographic obstacles, foster economic growth and create better job opportunities for Palestinians.
With its tech-savvy young population, the potential is huge" said Kanthan Shankar, World Bank Country Director for West Bank and Gaza. "However, Palestinians should be able to access resources similar to those of their neighbours', and they should be able to rapidly develop their digital infrastructure as well," added Shankar.