RAMALLAH, Thursday, October 22, 2020 (WAFA) - The World Bank’s report on the Palestinian economy which expected an 8 percent contraction in the economy in 2020 is in line with the expectations of studies and reports prepared by the Council of Ministers on the state of the Palestinian economy with the health, economic and political challenges in 2020, today said the Office of the Prime Minister.
According to the World Bank’s report, after a successful containment of COVID-19 in the Palestinian territories in the spring, the second wave returned by July. Economic activity suffered during the lockdown in the second quarter and is expected only to stabilize in the second half if the current conditions prevail. The fiscal position has worsened not only due to the outbreak but also due to a political standoff that is disrupting the flow of revenues. The outlook remains precarious and subject to numerous political, security and health risks.
It explained that following three consecutive years of economic growth below 2%, 2020 is proving to be an exceptionally difficult year as the Palestinian economy faces triple reinforcing crises: i) resurgent COVID-19 outbreak, ii) a severe economic slowdown, and iii) another political standoff between the Palestinian Authority and Government of Israel, disrupting clearance revenues.
It said that a difficult year is already assured even with no further escalation of public health measures. While GDP for 2020 is expected to contract by about 8%, a modest bounce back is expected in the forecast period with growth averaging 2.5% as full normalization of activity is not expected to occur before the second half of 2021. The poverty rate is projected to stall around 27.5% in 2021.
The Prime Minister's economic adviser, Shaker Khalil, explained that this year is a difficult year for all world economies because of the corona outbreak, but Palestine has faced additional challenges such as Israel's threats to annex parts of the West Bank, the disruption of the transfer of clearing funds and a sharp decline in foreign aid.
"The Council of Ministers is working on an economic recovery plan to address the economic consequences of the corona pandemic at the immediate, medium and long term levels, through economic policies to accelerate the economy," he said.