Palestinian Economy Contracted by 11.5% in 2020, World Bank Says

(Bloomberg) -- The Palestinian economy probably contracted by 11.5% last year partly because of the Covid-19 pandemic, according to the World Bank.

The coronavirus pandemic exacerbated the “bleak” outlook for the Palestinian economy, which already suffered from persistent fiscal deficits and high unemployment rates, the World Bank said in a report on Monday. The refusal by the Palestinian Authority between May and November to receive taxes collected by Israel on its behalf, and a 20% drop in aid contributed to a fiscal gap exceeding $1 billion, the highest in years, it said.

The pandemic highlighted pre-existing weaknesses in the Palestinian health system, including limited budgets and fragmented governance. The Palestinian territories have one of the lowest testing rates in the region, and positivity rates indicate an uncontrolled spread of the virus, the report said.

The Palestinian Authority plans to vaccinate 20% of the population with free doses supplied by the World Health Organization-backed Covax program, and has also said it will spend about $55 million on additional vaccines to reach 60%. So far, it has received fewer than 20,000 doses of vaccine.

The report, which will be presented to the Ad Hoc Liaison Committee in a virtual meeting on Feb. 23, called for improved coordination between the Palestinian Authority and Israel in order to control the pandemic and administer the vaccine.

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