Covid-19 has shattered Palestine’s fragile economy, report finds 

UN agency workers distribute medicines to Palestinian families amid the ongoing coronavirus COVID-19 pandemic in Gaza City, Gaza Strip, 7 September 2020. (EPA/Mohammed Saber)

Covid-19 has intensified the dire economic conditions in the Occupied Palestinian Territory (OPT), according to the latest report by the United Nations Conference on Trade and Development (UNCTAD).

The organisation, which routinely assesses and reports on the economic costs of the Israeli occupation for the Palestinian people, has called on the international community to extend urgently needed assistance in the form of donor-funded rescue packages to prevent the situation deteriorating further.

The report stated that there is “no alternative to donor support” for ensuring the survival of Palestinian National Authority (PNA) and its capacity to provide vital services to the Palestinian people, who are facing mass poverty and unemployment.

It also recommends the international community to reverse its decision to deduct $144 million per year from Palestinian revenue, and calls on Israel to shoulder its responsibility under international law – including lifting the closures and restrictions in Gaza to allow the importation of medical equipment, hygiene kits, ventilators, and other supplies.

Escalating economic pain

Lockdown measures introduced to control the pandemic since it was first identified in the territory in early March have had catastrophic economic implications, with the fiscal revenues of the PNA declining to their lowest levels in 20 years by April 2020, according to UNCTAD.

The economic impact is being heightened by escalating spending on health, social welfare, and support from the private sector necessitated by the pandemic, and the restraints on the PNA under occupation.

With no access to external borrowing, no national currency, no independent monetary policy and no fiscal space, the PNA lacks the economic policy tools to deal with the huge challenges posed by the pandemic.

The report also highlights the distinct struggle of Palestinian women under occupation, citing a decline in traditional employment sectors such as agriculture. As with elsewhere in the world, the pandemic will undoubtedly increase the risk of poverty and marginalization these women face.

Call for more donors

The Palestinian economy has been highly dependent on official and private transfers since the advent of the virus, but these are forecasted to decline in its aftermath. It’s predicted that donor support in 2020 could fall to the lowest levels in more than a decade – at around $266 million – which would mean the situation is set to deteriorate further.

“The international community should urgently redouble support to the Palestinian people to enable them to cope with the economic fallout from the pandemic,” said UNCTAD Secretary-General Mukhisa Kituyi. “There is no alternative to donor support for ensuring the survival of the Palestinian economy.”

Estimates surrounding the cost of Covid-19 indicate an economic loss ranging from 7% to 35% of GDP, depending on forecast assumptions about the duration and severity of the pandemic.

Measures imposed by Israel, a sharp decline in donor support and poor economic performance ensured that socio-economic conditions in the OPT were deteriorating rapidly before the virus struck.

In Gaza, 80% of the population is dependent on unstable international assistance, lacking food security, hygiene resources, health care, electricity, and safe drinking water. With one of the highest population densities in the world, the social distancing required to mitigate the spread of Covid-19 is particularly challenging in Gaza, highlighting the urgency of UNCTAD’s call for effective donor engagement.