A new report from the World Bank paints a grim picture of the Palestinian economy, with expectations that it will continue to perform well below its potential, projecting a growth rate of only about 3%.
Moreover, due to population growth trends, per capita income growth is expected to stagnate, negatively impacting living standards.
Additionally, financial constraints and restrictions imposed by Israel hinder access to healthcare services, particularly in Gaza.
“The outlook for the Palestinian economy remains bleak amid a volatile political and security situation, with downside risks persisting,” the report said. “Together with lower regional growth, the increasingly difficult environment is weighing on both the supply and demand side of the economy.”
The report said growth had rebounded in 2021 after the pandemic but had then halved to 3.9% in 2022 and was expected to decline further to 3% in 2023.
“Projections point to a gradual reduction of per capita incomes over the medium term amid a continued widening of the already large gap in living standards between the West Bank and Gaza. … Persistently high unemployment and poverty add to fragilities and social tensions,” the report said.
The report, titled “Race Against Time,” will be presented to the Special Coordination Committee, a policy-level meeting on coordinating development assistance to the Palestinian people, in New York on September 20, 2023.
The report sheds light on the economic challenges faced by the Palestinian territories and describes the obstacles affecting healthcare services.
Read more: Israeli Blockade Impact on Gaza in August 2023
Impact of Israeli Occupation
Stefan Embland, the Director and Resident Representative of the World Bank in the West Bank and Gaza, commented, “The Palestinian economy has fundamentally suffered from stagnation over the past five years, and it is not expected to improve unless policies on the ground change. The Palestinian territories have been in a customs union with Israel for thirty years, but contrary to expectations at the time the relevant agreements were signed, the economic gap has widened. Income per capita in Israel is now 14-15 times higher than in the Palestinian territories, and poverty rates are exceedingly high. Approximately one in four Palestinians lives below the poverty line.”
Embland added, “The report reminds all parties of the urgent need to work towards stimulating per capita income growth and strengthening public finances.”
The Palestinian economy still faces significant risks due to a complex system.
These include Israeli restrictions on movement and trade in the West Bank, a quasi-siege on Gaza, internal division between the West Bank and Gaza, stringent fiscal constraints, an incomplete reform program by the Palestinian Authority, and dwindling foreign aid over several years.
The significant material and administrative barriers restrict the timely referral system for treating non-communicable diseases, heart conditions, maternal and child health cases, which are not available in public hospitals in the West Bank and Gaza.
The Israeli occupation, the fragmentation of Palestinian territories, the broader economic and fiscal context outlined above, have had a significant impact on the Palestinian healthcare system’s ability to provide these services in public hospitals.
The situation is particularly dire in Gaza, which suffers from limited healthcare system capacity. Patients’ struggles to obtain necessary medical exit permits, slow external referral processes, and complicated administrative procedures all contribute to inefficiencies in healthcare delivery.
Approximately 42,000 permit requests are made annually by patients alone (excluding companions), with the vast majority of patients requiring permits from Israel for external medical referrals.
The approval rate for these permits varies from year to year, and patients themselves can be refused, delayed, or accepted at different stages of the continuum of care, highlighting some degree of arbitrariness in the evaluation process.
The data derived from research shows that the near-siege imposed on Gaza had a negative impact on mortality rates. Some patients tragically passed away before completing the permit process.
Considering the rising costs imposed by private and NGO-affiliated hospitals, the external referral system constitutes a significant portion of the Palestinian Ministry of Health’s expenditures. This leads to unsustainable expenditure growth, adding to the pressure on public finances.
Moreover, for referrals to Israeli hospitals, the Ministry of Health has no control over prices, and costs are deducted from the clearance revenues owed to the Palestinian Authority.
The outlook for the Palestinian economy and healthcare system remains challenging. To address these issues, a comprehensive approach involving policy changes, international support, and pressuring the Israeli occupation to fulfil its responsibilities as an occupying power is essential.
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