Economic situation

An Overview

The economic sector serves as a basis for the development of other sectors and it has direct relation with other essential sectors, as the Gaza Strip has roughly 4,811 industrial firms employing 26,041 workers.

In the Gaza Strip, the unemployment rate reached about 48% which led to an increase in poverty to 54%. The government sector employs 209.500 workers in Palestine, whereas the private sector employs 667.600 workers, including 165.900 in Gaza, and the local market employs 877.100 workers, including 261.000 in Gaza. In Palestine, the government employs 50,400 women and the private sector employs 108,900 women.

The Palestinian economy is classified as a service economy where services and other basic branches ranking top in the Palestinian Economy in terms of value-added. In Palestine, this activity decreased by 7.0% in 2020 compared to 2019. In the west Bank, it declined by 8.0% and 4.3% in the Gaza Strip. In terms of the activity’s contribution in Gross Domestic Product, the contribution in GDP has raised in Palestine and reached 35.1%. Due to the varying percentages of change in the added-value of these activities between the West Bank and Gaza Strip, the contribution in the West Bank increased to 31.7%, and it increased to 51.2% in the Gaza Strip.

Industrial activity is one of the most important productive activities in the Palestinian economy; it is a cornerstone of any country’s economic development, producing a significant portion of the items utilized in the production process. It also provides final consumption goods and contributes to Palestinian exports. In addition to being impacted by the Corona Pandemic, Palestine’s industrial activity encounters significant hurdles, the most significant of which is the control of Israeli occupation to the entry of raw materials required in Palestinian manufacturing. Its value-added for 2020 decreased by 12.7% in Palestine while 13.3% in the West Bank and 8.1% in the Gaza Strip, compared to the previous year. In terms of its contribution to GDP, it has dropped to 12.9%. The disparity in the percentage of change between the West Bank and the Gaza Strip resulted in a variation in contribution ratios. In the West Bank it declined to 13.8% while it raised to 8.8% in the Gaza Strip in 2020.

Agriculture is a significant aspect of the Palestinian economy as it contributes in compositing GDP, covering a portion of final food consumption, and providing commodities and raw materials that are used as inputs in various manufacturing industries. It is also a significant component of Palestinian exports. In Palestine, agricultural activity is characterized by its great dependence on rainfall and its limited use of modern agricultural techniques. Its value-added declined by 9.2% in Palestine in 2020 compared to 2019 while it declined with a percentage of 8.3% in the West Bank and 11.1% in the Gaza Strip. Its contribution rate to the Gross Domestic Product climbed to 7.1% in Palestine in 2020. The disparity in the percentage change in value-added by region reflected on the contribution percentage as it increased to 6.1% in the West Bank 12.0% in the Gaza Strip.

Construction activities constitute an important component of total constant capital formation which is incorporated into the calculation of the Gross Domestic Product, and thus represent an important dimension in the analysis of the Palestinian economy’s structure and development. Construction activity, like other economic activities, experienced significant fluctuations as the added-value of this activity declined sharply with a percent of 35.6% in Palestine in 2020 compared to the previous year due to the effects of the Corona pandemic, and dropped sharply estimated at 36.0% in the West Bank and 33.6% in Gaza. In terms of the activity’s contribution to Gross Domestic Product, it declined with a percentage of 4.1% in Palestine. The disparity in percentages of change by region led to the variation in contribution percentages as it declined to 4.0% in the West Bank and 4.6% in the Gaza Strip in 2020.

Gross Domestic Product at Constant Prices

The impact of the Corona pandemic on the Palestinian economy caused a dramatic drop in the Gross Domestic Product in 2020 with a percentage of 11.5% compared to 2019, resulting in declining the per capita GDP as it reached 13.7% compared to 2019 due to natural population growth.

Due to the pandemic, the continued restrictions on the movement of goods and people, the prohibition of export, particularly agricultural commodities with a high competitive advantage, the suffocating siege imposed by Israeli occupation, and the repeated aggressions, Gaza Strip’s Gross Domestic Product has witnessed a drop with a percentage of 17.7% in 2020 compared to the previous year.

Per Capita Gross Domestic Product

The per capita Gross Domestic Product in Palestine declined in 2020 compared to 2019 as it amounted to 2,913.9 dollars, and it decreased in the West Bank with a percentage of 13.4%, or 4,176.1 dollars, and decreased with a percentage of 14.8%, or 1,211.9 dollars in the Gaza Strip in 2020.

Workforce capacity

The workforce shrank with a percentage of 6.5% in 2020 compared to 2019, reaching 1,217.4 persons while the percentage of participating workforces dropped to 41.3% in 2020 compared to 44.8% in 2019. The percentage of the participating workforce varied between the West Bank and Gaza Strip as it reached in the West Bank 45.4%, and 35.3% in the Gaza Strip in 2020. These percentages reflect a drop in the participation rate in the West Bank and Gaza Strip due to the reduction in the size of the workforce in the West Bank and Gaza Strip in 2020 in exchange for an increase in the total workforce.

The siege's impact on Gaza's economic sector

Israeli occupation continues its policy of closing the crossings and preventing the entry of materials to the Gaza Strip as the building materials, raw materials, spare parts and equipment needed to rebuild and restore what was destroyed by the Israeli occupation during the last aggression.

The commercial crossing is subject to strict restrictions that hinder the exporting and importing processes and constitute an obstacle to the entry of materials, especially the most basic, as Israeli occupation claims that they have dual usage. It also negatively affect the work of the industrial companies in Gaza Strip where thousands of workers became unemployed and the price of raw materials increased making many of them completely rely on the Qatar scholarship as a source to encounter the hardships of life and provide for their needs.

The number of workers in Gaza who have lost their source of income during the years of suffocating siege has surpassed 100,000. The total number of unemployed people, including those who are employed but have lost their source of income, those who are not working at all, and graduates who have not been able to find work, is estimated to be more than a quarter of a million. The poverty rate in Gaza has risen to 54%, with an average daily income per capita worker of at best $10, well below the poverty line of $25 that determines daily collection, and it is not limited to workers; university graduates in Gaza need from 6 to 72 months to find work, which is usually outside their academic major, with no more than $250 per month.

The latest aggression's impact on Gaza's Economic

Despite the deterioration in Gaza’s economy, it has risen dramatically as a result of the most recent Israeli aggression in May, which caused massive damage ranging from $290 million to $380 million, with recovery needs expected to be between $345 million and $385 million, as more than 525 economic facilities were damaged, including shops and commercial centers on the ground floor of the buildings and towers that were destroyed. It also included 50 factories, seven of which were entirely destroyed. Another 15 enterprises were damaged, and 10 were entirely destroyed in the industrial zone.

The destruction of industries and economic institutions resulted in an increase in the unemployment rate, which reached a peak of over 48%, and it led to 350 workers losing their jobs which increased poverty rate.

Targeting the economic sector aims to destroy what remains of Gaza’s fragile economy and inflict the greatest losses on the private sector, as the economic institutions do not pose any threat to the occupation, but it is a systematic barbaric policy to destroy the Palestinian economy and intensify the suffocating siege imposed on Gaza since 15 years.

The impact of Covid-19 on Gaza's economic

The economic crisis in the Gaza Strip has worsened significantly as a result of the suspension of productivity in some economic activities and its decrease in varying rates in various activities, leading to an increase in unemployment and poverty rates, with more than 450,000 workers unemployed in Palestine, including 155 thousand in the Gaza Strip, as a result of the policy of continuous closures and precautionary and preventive measures. The pandemic led to an increase in public expenditures by the government, a decrease in public revenues, and a halt in the import and export movement, which paralyzed most Palestinian industries, it also resulted in a 270,000-strong surge in people registered with the Palestinian Ministry of Labor, including 140,000 university graduates and 130 workers.