Palestinian economy on the verge of collapse, warns UNCTAD

Deutsche Presse Agentur
Published: Tuesday September 12, 2006

Geneva- The economy of the occupied Palestinian territories was on the verge of collapse and the Palestinian Authority had been left in a "perilous financial position," a new report from the United Nations Conference on Trade and Development (UNCTAD) warned Tuesday. According to UNCTAD's annual report on assistance to the Palestinian people, years of conflict have left the economy battered by the end of 2005 and unable to withstand the huge loss of international aid following the Palestinian elections.

The territory had become increasingly dependant on external support and imports, particularly from Israel, and had seen its trade deficit widen by 60 per cent between 2002 and 2005, rising from 1.7 billion dollars to 2.7 billion dollars.

UNCTAD report also forecast that real per capita income would "plummet" to its lowest level for a generation - to 1,200 dollars per person in 2007 - if the level of aid fell by 30 per cent a year between 2006 and 2008.

It stated unemployment would affect half the Palestinian workforce by the end of the year, and two out of three Palestinian households would fall below the poverty level.

Even with increased aid, greater mobility and the resumption of Israel transfers of tax revenues to the PA, the Palestinian economy was unlikely to achieve sustained growth.

The report called for urgent action through intensified international aid and internal government programmes such as prudent fiscal policies, to avert an economic collapse.

© 2006 DPA - Deutsche Presse-Agenteur