WASHINGTON-(BNEWS)-The war in Gaza is having a severe impact on the Palestinian economy, the World Bank said Tuesday.
"The current conflict in the Middle East has left large numbers of people dead and injured, ravaged vital infrastructure in the Gaza Strip, and cast a heavy shadow on economic activity in the West Bank," the World Bank said in a report.
This war will have lasting effects on the impacted populations in Gaza and the West Bank far beyond what can be captured in numbers alone, the report said, adding "Similarly, it will have a lasting impact on the Palestinian economy."
Declining incomes from job loss, dwindling trade, heightened restrictions, and salary cuts are dampening growth by affecting consumption levels, the World Bank said in its report, warning that labor market impacts are making Palestinians poorer.
"Incomes suddenly dropped due to lack of employment, declining trade and private sector activity, increased restrictions on movement and temporary reductions in public salaries in the West Bank. Consequently, consumption the only actual engine of the Palestinian economic rebound since the COVID 19 shock is taking a deep hit," the report added.
"The current crisis exacerbates pre-existing structural weaknesses, and efforts by the international community to address them have had limited success. The occupation, and related restrictions, have long affected both potential and actual growth and fiscal sustainability, as well as the lack of access to resources and the control over a large portion of the territory including Area C. This has imposed binding constraints to economic activity and development long ahead of the conflict," it said.
"While poverty and vulnerability in Gaza are going to increase substantially, adverse welfare effects will be clearly felt across the West Bank, too. Multidimensional poverty is estimated to have skyrocketed in Gaza and could increase also in the West Bank," according to the report.
A national reduction in GDP of 3.7 percentage points in 2023 suggests that all the welfare gains made in the Palestinian territories since the end of the pandemic would be erased, and that poverty at the end of 2023 would reach slightly higher levels than in 2020, at the height of COVID related economic restrictions, when it stood at 26.5 percent, the report indicated.
