Blockades, war, and poor governance have strangled Gaza’s economy and made the region’s unemployment rate the highest in the world today, according to the latest World Bank economic update. The report will be presented to the Ad Hoc Liaison Committee (AHLC), a forum of donors to the Palestinian Authority, at the bi-annual meeting in Brussels on Wednesday, May 27.
Construction workers in Gaza (Photo: Gisha)
The report estimates that Gaza’s GDP would have been about four times higher than it currently is if it weren’t for the conflicts and the multiple restrictions placed upon it by Israel and Egypt. The report also states that the blockade enacted on Gaza by Israel since 2007 has shaved around 50% off its GDP. Unemployment in Gaza is the highest in the world at 43%. Even more alarming is the situation of youth unemployment which soared to more than 60% by the end of 2014.
“Gaza’s unemployment and poverty figures are very troubling and the economic outlook is worrying. The current market in Gaza is not able to offer jobs leaving a large population in despair particularly the youth,” said Steen Lau Jorgensen, World Bank Country Director for West Bank and Gaza. “The ongoing blockade and the 2014 war have taken a toll on Gaza’s economy and people’s livelihoods. Gaza’s exports virtually disappeared and the manufacturing sector has shrunk by as much as 60%. The economy cannot survive without being connected to the outside world.”
Gaza’s real GDP is only a couple of percentage points higher now than it was 20 years ago in 1994, while the population growth is estimated to have increased by about 230 percent over the same period. Consequently, real per capita income in Gaza is 31 percent lower now than in 1994. The 2014 war has reduced Gaza’s GDP by about US$460 million. Construction, agriculture, manufacturing, and electricity sectors were hit the hardest with output reductions of 83% in the construction sector in the second half of 2014 and roughly 50% in other sectors. Gaza became has become a major source of deficit and fiscal burden on the Palestinian Authority: while about 43% of the PA’s expenditures are spent in Gaza, only 13% of its revenues come from there.
Gaza’s population chronically suffers from poor access to and quality of basic public services such as electricity, water, and sewerage. Nearly 80% of Gaza’s population receives some kind of social assistance, yet nearly 40% still live below the poverty line. While shocking, these numbers fail to fully convey the difficult living conditions that nearly all Palestinian Gaza’s residents have been experiencing.
“Even more shocking is the reality that most of Gaza’s 1.8 million residents are confined to an area of 160 square kilometers and are not able to travel beyond this area without permits. According to the Washington-based Center for Mind-Body-Medicine, as many as one third of Gaza’s children showed signs of post-traumatic stress disorder even before the 2014 armed conflict, now even more do,” said Jorgensen. The status quo in Gaza is unsustainable. Recovery is conditional upon easing of the blockade to allow reconstruction materials to enter in sufficient quantities and to let the exports out, as well as donor financing for reconstruction.
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