In a new report the World Bank says real GDP growth in the West Bank and Gaza during 2008 is estimated at about 2 percent, which translates to an almost 1 percent decline in real per capita terms, reuslting in a per capita income of just over US$1,000 in 2008.
The 2008 unemployment rate is estimated at an average of about 40 percent in Gaza and 19 percent in the West Bank, up from an average of 30 and 18 percent, respectively, in 2007.
The report claims that due to the Israeli measures, the Palestinian productive sectors declined while the public sector grew.
Thus, the PA’s wage bill alone is equivalent to 22 percent of GDP. The result is a growing dependency on donor aid for the prevention of fiscal collapse. In 2008, external aid to the PA amounted to nearly 30 percent of GDP.
It added that foreign aid will not be enough for the Palestinian economic growth. "Aid should be recognized for what it is -- more of a stabilizing measure, slowing down socio-economic decline, than a catalyst for sustainable economic development. Large amounts of donor aid have produced insignificant growth and an increase in economic dependency, despite the consistent improvement in PA governance and security performance..."