World Bank: Palestinian Economy Contracted by 11.5% in 2020


The Palestinian economy probably contracted by 11.5% last year partly because of the Covid-19 pandemic, a report by the World Bank has said.

The World Bank expected the Palestinian economy to shrink by 11.5 percent last year, far from previous estimates of a 7 percent contraction, under the impact of the Corona pandemic and the disruption of clearance funds.

In a report distributed today, Monday, and which will be submitted to the meeting of the International Aid Coordination Committee for the Palestinian People scheduled for Tuesday, the World Bank said, “The repercussions of the Coronavirus (Covid-19) pandemic continue to harm the already faltering Palestinian economy, and it is expected to lead to a contraction of GDP. By 11.5% in 2020, which is one of the steepest drops ever.

In its new report, the World Bank calls for “coordination at all levels to combat the outbreak of the Coronavirus, and to ensure the continuity of providing vital health services, in light of the current public financial crisis, the shortage of medical equipment in the health sector, and the difficulties surrounding the ability to secure vaccines.”

The World Bank said, in a statement, that the report sheds light on the major challenges facing the Palestinian economy, and describes the implications of the Corona pandemic on the health sector and the policy measures adopted.

The report stated that “even before the situation worsened as a result of the pandemic, the prospects for the Palestinian economy were bleak in light of low levels of growth, persistent fiscal deficits, high unemployment rates, and increasing poverty rates.”

He added, “This situation has worsened as a result of the multiplying effects of the pandemic and the suspension of clearance funds, which are import taxes that Israel collects on behalf of the Palestinian Authority, which led to the most severe recession of its kind in economic activity.”

Kanthan Shankar, Director and Resident Representative of the World Bank in the West Bank and Gaza Strip, said in the statement, “The Corona pandemic and its repercussions have exacerbated the already difficult and worrisome situation for the Palestinian economy in 2020.”

He added: As the Corona pandemic continues, the additional pressures on fragile social, economic and health systems make it much more difficult to deal effectively with the crisis. The challenges in securing vaccines add to the uncertainty of the Palestinian people and the economic recovery.

Shankar explained that the crisis has negatively affected employment levels, especially in the sectors affected by social distancing measures, such as tourism, restaurants, construction, and workers who cross into Israel, while the unemployment rate across the Palestinian territories reached its peak during the third quarter of 2020, before declining to 23.4% in the last quarter of the year, 15% in the West Bank and 43% in the Gaza Strip.

According to World Bank estimates, the poverty rate has risen to about 30%, with about 1.4 million people suffering from poverty.

Shankar said: In addition, the Palestinian Authority’s decision to stop receiving clearance funds from the Israeli government, from May to November 2020, reduced the resources available to address the health crisis. The multiplier effect of the pandemic, the halting of clearance funds, and the 20% decline in budgetary aid led to a public finance gap that exceeded one billion dollars – the highest gap in years.

The representative of the World Bank said that the worsening of the Corona pandemic in both the West Bank and Gaza Strip revealed deficiencies in the Palestinian health system, which has been affected by the protracted conflict, limited resources, and challenges associated with the fragmentation of governance systems and service provision.

He said: The Palestinian Territories have one of the lowest rates of infection testing for Coronavirus in the region, and the current infection rate, which is more than 21% among the individuals who have been tested, indicates that the pandemic is out of control, according to the guidelines of the World Health Organization.

He continued: The pandemic disrupted funding for other basic health services, such as maternal and child health services, in addition to noncommunicable diseases, and the suspension of coordination with Israel led to severe disruptions in foreign medical referrals to obtain life-saving treatment services in Israel, which are not available in Israel. Palestinian territories.

Shankar said: “The Palestinian health sector faces great challenges, and improving coordination between the West Bank and Gaza Strip, as well as between the Palestinian Authority and Israel in times of the Coronavirus outbreak, would benefit the region in fighting the virus and ensuring the recovery of the economy. It is also in everyone’s interest to ensure high rates of vaccination coverage.

According to the World Bank, the Palestinian Authority expects to vaccinate 20% of the population with free doses provided by the international “Kovacs” program, with the support of the World Health Organization, and the Ministry of Health intends to purchase additional vaccines to cover 60% of the population.

Shankar said: The estimates regarding the cost of purchasing Corona vaccines and the vaccination campaign indicate that about $ 55 million is needed to cover 60 residents, but there is a current gap of $ 30 million.

He pointed out that the Palestinian Authority has so far received less than 20,000 doses of vaccines.

He added: While Israel tops the list of countries in the world that have the fastest rate of vaccination against the Corona virus, the strategy of the Israeli Ministry of Health has not allocated any doses to support the Palestinian territories, with the exception of providing 5,000 vaccines for Palestinian doctors.

In the report, the World Bank recommends improving the level of coordination between the Palestinian Authority and Israel in order to combat the Corona virus and administer vaccines, and reduce the difficulties that exist due to restrictions imposed on movement through border crossings to allow the passage of life-saving medical supplies.

He said: This coordination is of great importance at a time when the Palestinian Authority is working on finalizing its plans for vaccination against the virus.

The report also recommends the establishment of a public health emergency operations center, in order to centrally manage data to ensure that decision-making is directed, and to act as an effective coordination body with all partners.

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