Monday 26 June 2023
Last update on Monday, June 26, 2023 At 12:04 PM
The Palestinian Territories, with a GDP of $19 billion, face many economic challenges, notably due to the constraints of the occupation and governance shortcomings. Despite this, they manage to maintain a resilient economic situation. In 2022, the country recorded economic growth of +4%, with inflation under control. The Palestinian banking sector is sound, and efforts have been made to contain the budget deficit, which stood at only 0.9% of GDP in 2022, compared to 5.2% in 2021.
The arrival of a new government in Israel did not bring significant changes to the economic situation of the Palestinian Territories.
The terms of trade remain unfavorable for the Palestinian side, but have not worsened with regard to work permits, passage of goods, banking correspondence and various rules. Tensions between Israeli settlers and Palestinians have meanwhile increased. Yet Israel and the Palestinian Territories remain closely integrated, with a common currency, the presence of Palestinian workers in Israel (210,000 per day), a large share of Palestinian production exported to Israel (92%) and the presence of 800,000 settlers Israelis in the West Bank.
The Palestinian Territories are distinguished by significant human capital.
Nearly two-thirds of the Palestinian population is under 30 years old. This population is relatively well educated, trained and often multilingual. The enrollment rate is high, with 94% in primary, 92% in secondary and 43% in higher education. Young Palestinians also express a desire to access their rights, particularly in economic terms. They aspire to undertake, train and travel.
Politically, the level of trust in the Palestinian Authority is very limited.
The last elections scheduled for 2021 have been canceled, reinforcing the mistrust of the population. Civil servants’ salaries have been paid irregularly for nearly two years, leading to numerous strikes. The Palestinian Authority is accumulating significant debts and arrears to the private sector and banks, and security cooperation with Israel seems to be its sole political concern. At the same time, international budgetary aid to the Palestinian Territories has considerably decreased in recent years.
The fragmentation of the three Palestinian areas (West Bank, East Jerusalem, Gaza Strip) is increasing politically, economically and socially.
In particular, the Gaza Strip, under the control of Hamas since 2007, is experiencing an economic stall. Although its population is growing rapidly, development is in decline, with economic growth ten times lower than population growth. This leads to a continuous deterioration of living conditions, with the GDP per capita rising to less than USD 2,000.
The engines of economic growth in Palestine reside in sectors such as banking, infrastructure and renewable energy, health, tourism, agribusiness and new technologies.
Business opportunities exist for French companies, particularly in the water sector. The visit of the President of MEDEF at the end of January 2023 had positive repercussions and opened up prospects for economic cooperation between France and Palestine.
Source Embassy of France in Lebanon
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