São Paulo – Economic growth, job creation and improvement of living conditions in Gaza and the West Bank depend on peace talks between Palestinians and Israeli. According to a report issued this Thursday (12th) by the International Monetary Fund (IMF), the success of this process is crucial in order for Palestine to experience truly sustainable growth in years to come. <\/p>\n
“The resumption of direct peace negotiations with Israel raises chances that economic conditions could improve, but there is a risk that the protracted nature of the peace process and the uncertainties about the associated economic package impede policy action,” according to the report.<\/p>\n
According to the document, the Office of the Quartet Representative (OQR) is devising a plan that provides for large amounts of foreign investment that will, however, require that Israel eases the restrictions currently in place on the Palestinian state. The Quartet is the group comprised of United States, European Union, Russia and the United Nations, which was entrusted in 2002 with mediating peace in the region. The group is represented by the former British prime-minister Tony Blair.<\/p>\n
“At this time, Israel has not indicated that it will ease restrictions further, and there may be local implementation constraints. A positive sign is the recent resumption of direct discussions between Israeli and Palestinian officials about improving the clearance revenue mechanism,” according to the IMF.<\/p>\n
Clearance revenues are collected by Israel on goods imported by Gaza and the West Bank, and should be, but not always are, transferred to the Palestinian Authority’s treasury. <\/p>\n
Fragile economy <\/strong><\/p>\n The IMF study shows that in 2012, the Palestinian economy experienced a shock and grew by slightly over half the rate seen in the preceding years. In 2010 and 2011, the Gross Domestic Product (GDP) of the West Bank and Gaza Strip was up 10% a year, on average. In 2012, it was up 5.9%.<\/p>\n “Broadly unchanged Israeli restrictions in 2012 and political uncertainty undermined economic activity, aggravated by shortfalls in donor support and associated accumulation of public sector arrears to the private sector,” according to the IMF, which pointsout that in that year there was an imbalance between strong growth in consumption of imported goods and little growth in exports. The Fund claims that construction and services were the sectors that contributed the most to the country’s growth.<\/p>\n The survey notes that the Gaza and West Bank territories are increasingly dependent on donations. In 2012, 9.1% of Palestine’s GDP originated from donations, a rate that should rise to 11.7% this year and then drop to 9.7% in 2014, 9.1% in 2015 and 8.6% in 2016, due to difficulties encountered by donor countries. <\/p>\n Palestine’s deficit is also expected to decline over the next few years, from 16.5% of the GDP in 2012 to 11.2% this year. Inflation should remain controlled at around 2.7%, but the GDP will grow at lesser rates. It is expected to be up 4.5% this year, 4% in 2014, 3.5% in 2015 and 3% in 2016. <\/p>\n At this time, 23% of the Palestinian population are unemployed. The rate is highest in the Gaza Strip, where 31% of the locals are jobless, as against 19% in the West Bank. The situation is worst among the youngest: 47.5% of people aged up to 29 in the Gaza Strip and 37.2% in the West Bank are unemployed. <\/p>\n “The Palestinian Authority’s finances are not viable over the medium term if the current model of financing large deficits with unpredictable aid flows is maintained,” according to the document.<\/p>\n *Translated by Gabriel Pomerancblum<\/strong><\/p>\n