According to the World Bank the lack of peace and reconciliation on the political horizon has created an unsustainable economic situation in the West Bank and Gaza. Even though donor aid had increased government-funded services and fueled consumption-driven growth from 2007 to 2012, this model of growth has proved unsustainable. Donor support has significantly declined in recent years, and naturally aid cannot sustainably make up for inadequate private investment, anyway constrained by weak investor confidence because of ongoing restrictions and the lack of political progress. Recovering slowly from recession in 2014, the growth rate is projected to hover around 3.5 % in the medium term.

The 2014 war in Gaza created a humanitarian crisis and caused US$1.7 billion in losses to the economy, which continues to suffer to this day. Even though growth in the Gaza Strip reached 7.3% in 2016, due to increased construction, Gaza’s economy is not expected to rebound to its pre-2014 war level until 2018. Alongside its stunted recovery, Gaza suffers from severe shortages of electricity with rolling blackouts.

In 2016, the unemployment rate remained stubbornly high at 27%: 42 % in Gaza and 18% in the West Bank. Youth unemployment in Gaza is particularly worrying at 58%. And, although nearly 80% of Gaza’s residents receive some form of aid, poverty rates are very high.

The current decline could be reversed in an environment where sustainable, private sector-led growth is fostered, coupled with a commitment of ongoing financial support from the international community. A dynamic private sector can generate the sustainable growth needed; however, restrictions put in place by the Government of Israel continue to stand in the way of potential private investment. Access to Gaza remains highly controlled, and much of Area C, which makes up 60% of the West Bank, is inaccessible to Palestinians.

BERF work in the OPTs

BERF completed one assignment under the stakeholder engagement work stream in the OPTs.  This had a particular focus on gender, youth and political economy issues.

BERF OPT Projects

  1. Occupied Palestinian Territories Diagnostic Review and Stakeholder Engagement,


World Bank Doing Business

According to the Doing Business Survey, West Bank and Gaza have a doing business ranking of 114 in 2018, not far behind Jordan which has a rank of 103. The distance to frontier score was 58.68, somewhat ahead of the regional average of 56.72. West Bank and Gaza had one major area of reform – strengthened access to credit.  A new Secured Transactions Law was passed, and anew collateral registry established. This reform contributed significantly to the overall improvement in the national distance to frontier score which increased from 54.88 in 2017.  The sub indicator for getting credit increased by 40 points from 40 to 80.

DFID OPT Strategy

Building stability: UK aid helps maintain stability in the OPTs by providing essential services and strengthening the capacity of the Palestinian Authority (PA) through financial and technical assistance. UK aid will support the PA to deliver health and education services, and will help develop a Palestinian state that can act as a ‘partner for peace’ with Israel, to underpin progress on a negotiated two-state solution. UK aid will support education for up to 25,000 Palestinians, up to 3,700 immunisations for children, and up to 185,000 medical consultations annually. In addition UK aid will support co-existence between the OPTs and Israel through projects that bring Israeli and Palestinian people together to break down barriers and build trust.

Basic services: In each year up to 2020/21 DFID’s funding to United Nations Relief and Work Agency for Palestinian Refugees (UNRWA) will provide  basic education to around 44,000 children, half of them girls; health services for around 280,000 Palestinian refugees; social safety nets for around 26,000 of the poorest Palestinian refugees; and a source of income for almost 2,000 refugee teachers and 300 refugees working in UNRWA health centres. The UK is challenging United Nations (UN) agencies, including UNRWA, to reform and ensure they deliver effectively for the world’s most vulnerable and are value for money for the UK tax payer.

Economic development: UK aid will help to build economic prosperity by supporting cooperation between the OPTs and Israel, and by improving the competitiveness of the Palestinian private sector through the Palestinian Market Development Programme. UK aid has helped create 2,500 jobs and will create more employment by supporting at least 800 small businesses to grow over the next three years. In addition, it will be supporting further areas of economic cooperation between the OPTs and Israel.