Economy of Palestine

The Palestinian economy is small and relatively open, although several large holding companies dominate some sectors. Because of the small size of the local market, access to foreign markets through trade is essential for private sector growth.

Restrictions on the movement and access of goods and people between the West Bank, the Gaza Strip, and external markets imposed by the Government of Israel  continue to have a deleterious effect on the private sector and limit economic growth.

During the second Intifada the Palestinian economy experienced the deepest recessions in modern history. In those two years, Palestinian real GDP per capita shrunk by almost 40 percent. The precipitator of this economic crisis was again a multi-faceted system of restrictions on the movement of goods and people.

Nevertheless, the Palestinian economy continued to exhibit some degree continuity and resilience. The proliferation of small business projects and informal economic activities have contributed to it weathering and adapting to the difficult conditions.

The services sector constituted the largest one in the West Bank economy in Q3/2014, accounting for 19.3% of GDP. This sector was followed by wholesale and retail trade (17.6%) and mining, manufacturing, electricity and water (16.4%).

In the Gaza Strip the largest sector of the economy in 2013 was construction, followed by services and public administration. Together, these three sectors account for more than 70% of total GDP. Productive sectors such as agriculture and manufacturing contribute relatively little to total GDP in the Gaza Strip.

The West Bank and Gaza have both experienced economic progress since the Oslo Accords but structural differences between the two areas remain.

Between 1995 and 2000, the Palestinian economy was growing at an average rate of 6% per year. If that trend had continued after 2000, when restrictions intensified, real GDP may have been more than double its current value to reach over $8 billion.

Following a long-term trend, Gazan nominal GDP per capita in 2012, at $1,565, remains around half that of the West Bank ($3,196).

While there are a number of common factors constraining development in both areas (e.g. limited access to water and energy, restrictions on movement and access, and poor infrastructure), such factors are significantly amplified in Gaza. Partly due to these restrictions, the slowdown in economic activity observed in 2012 was stronger in Gaza, where GDP growth fell from 21% in 2011 to less than 7% in 2012.

Although Palestine has very limited natural resources, it still has a highly renewable human capital resource. 57% of the population under the age of twenty and the rate of 65% under the age of twenty-fifth means an increase in the labour force, including a total of 500,000 workers in the next five years. This is in addition to the potential inherent in the working women's race, which is considered a strategic reserve for the labour force. This tendency has its impact on the availability of young labour force and an incentive for more investments in the economy.

Palestinian diaspora

The estimated one million Palestinians who have emigrated since 1948 (as well as their children) serve as a vital lifeline for Palestinians who remain in the West Bank and Gaza Strip. As a percentage of its GDP, the Palestinian territories are one of the most dependent economies in the world on remittances. The latest data from IMF in 2010 shows US$ 431m being transferred by workers employed abroad.

Essential Information

Area: 6,257 sq km (West Bank 5,879 sq km; Gaza 378 sq km).
Population: 4.4 million (1.76 million Gaza, 2,68 million West Bank).
 
Capital: East Jerusalem.
Principal Towns: Ramallah, Nablus, Jenin, Tulkarm, Hebron (West Bank), Gaza , Deir al-Balah (Gaza Strip).
Languages: Arabic and English are the main languages.
Gross Domestic Product: $6.797 billion (20 1 2)
 
GDP per capita: $641 (2012 est.)
Climate: The temperature range over the summer months of April to October is 23 degrees C to 31 degrees C. During winter, November to March, the temperatures range from 15 degrees to 20 degrees C with frequent rainfall.
Currency: $1 ≈ 3.63 new Israeli shekels (ILS), Jordanian Dinar, Dollar and Euro are also used.
 
DEMOGRAPHY:
Palestinian Territory: 4,4 million (2012 est.).
Population Gaza Strip:  1,8 million.
Population West Bank:  2,7 million.
Note: approximately 311,431 Israeli settlers live in the West Bank (2010 est.); approximately 186,646 Israeli settlers live in East Jerusalem (2009 est.)
Population growth rate: 2.1% (2012 est.)
Literacy ratio: total population: 92.4%
The total number of Palestinians in the World: 10,341,824, they are distributed as the following: (Palestinian territories 4.2 million, or 37%, Israel 1,2 million or 11.5%, Jordan 3,1 million or 30%, Other Arab Countries 1,7 million or 16.3%, Other Foreign Countries 593,580 or 5.7%).
 
WB
0-14 years: 34.4%
15-24 years: 21.8%
25-54 years: 35.9%
55-64 years: 4.2%
65 years and over: 3.8%
 
Gaza
0-14 years: 43.5%
15-24 years: 20.9%
25-54 years: 29.6%
55-64 years: 3.4%
65 years and over: 2.6%
 
NATURAL RESOURCES
Fossil Fuel

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