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Economic activity in Palestine contracted by nearly 1% in real terms in 2014, the IMF says, on the back of mounting political tensions in the West Bank, and the war in Gaza. This represents the first year-on-year contraction since 2006, and comes as GDP in Gaza declined around 15%, though West Bank GDP rose 4.5%.
Unemployment in the Palestinian territories, remains at around 41% in Gaza and 19% in the West Bank.
“A high degree of uncertainty and various headwinds will likely prevent a strong economic recovery in 2015,” the IMF said. “Most notable is the non-transfer to the Palestinian Authority (PA) of clearance revenues collected by Israel on goods imported into the West bank and Gaza.” These held funds represent about two-thirds of net revenues and are essential to both the PA’s budget and the Palestinian economy. The suspension of these revenues, given the current financing constraints, is likely to cause a sharp reduction in private consumption and investment.
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