WASHINGTON, May 23, 2024 – The World Bank has issued its latest update on the impact of the conflict in the Middle East on the Palestinian economy. The report draws on the latest available data and analysis to assess the ongoing impact of the conflict on the Palestinian economy.
It finds that the fiscal situation of the Palestinian Authority has dramatically worsened in the last three months, significantly raising the risk of a fiscal collapse. Revenue streams have largely dried up due to a drastic reduction in clearance revenue transfers payable to the Palestinian Authority and a massive drop in economic activity. The rapidly widening gap between incoming revenues and what is needed to finance essential public expenditure is driving a fiscal crisis.
As of the end of 2023, this financing gap reached US$682 million. This gap is projected to double within the coming months, reaching up to US$1.2 billion. Increased foreign assistance and further accumulation of arrears to public employees and suppliers are identified as the only available financing options for the Palestinian Authority.
Close to half a million jobs have been lost in the Palestinian economy since October 2023. This includes an estimated loss of 200,000 jobs in Gaza Strip, 144,000 jobs in West Bank, and that of 148,000 cross-border commuters from West Bank to Israeli labor market.
The report examines different dimensions of poverty among Palestinians using new official 2023 data. It assesses poverty rates across all Palestinian households by geographic location. Findings show that poverty was significantly increasing prior to October 2023.
The overall poverty rate among Palestinians stood at 32.8% in mid-2023 with significant differences between West Bank and Gaza. In Gaza, the poverty rate was close to 64%, while it was around 12% in West Bank. Compared to a similar analysis conducted in 2017, poverty had increased by 3.7 percentage points across Palestinian territories. Nearly every Gazan currently lives in poverty.
The research also reviewed GDP per capita figures for Palestinians. In 2023 it stood at $3,360—a drop of 12% from 2022 levels—with Gaza experiencing a steeper decline at 28%. Per capita income in Gaza was about one-fifth that of West Bank's income levels; Gaza’s per capita real income for 2023 was recorded as its lowest ever.
The Palestinian economy continues under significant strain during early months of 2024 with projections indicating potential further economic contraction ranging between 6.5% and 9.6%.