publication April 16, 2018
The economic outlook for the Palestinian territories is worrying with GDP expected to decrease by 2.5% in 2018 this year from 2.7% in 2017. Under a baseline scenario that assumes persistence of the Israeli restrictions and the internal divide between the West Bank and Gaza, real GDP growth of the Palestinian economy is projected to decline to 2.3% over the next two years. This modest growth implies a decline in real per capita income and an increase in unemployment.
Unemployment in the Palestinian territories continued to be high at 27% in 2017. In Gaza, it reached 44% compared to 18% in the West Bank. In 2017, only 41% of those aged between 15 and 29 were active in the labor market, reflecting high pessimism regarding employment prospects. Despite a low participation rate, unemployment amongst this category reached a staggering 60% in Gaza. There are also dramatic differences in labor force participation by gender. Male participation rates reached 71% in 2017 while women have recent participation rates of 19%.
The latest poverty numbers for 2011 suggest that about 21% of the Palestinian population lives below the US$5.5 a day poverty line. Poverty is expected to have been volatile in the following years witnessing a strong increase after the war in 2014 before gradually declining to pre-crises levels and then increasing again in 2017 due to the recent decline in incomes in Gaza.