In their annual economic forecast report for 2017, the Palestine Monetary Authority (PMA) predicted sluggish growth for the Palestinian economy mainly due to the crippling effects of the Israeli occupation.

“Despite annual real growth rates of approximately three per cent over the past few years, a slackening trend of economic growth remains evident,” PMA wrote in the report, which was released this week.

A report released by the World Bank in September had also said the Palestinian economy remained “worrying” as growth stagnation, delays in aid delivery and Israeli restrictions continue to seriously impede improvements to the financial situation.

The PMA attributed the dire condition of the Palestinian economy to political and geographic divisions between the occupied West Bank and the Gaza Strip, Israeli measures in the occupied territory and their “adverse impact on investor confidence”, as well as a sluggish private sector.

The report also pointed to the impact of Israel’s expansion of illegal settlements in the West Bank and East Jerusalem, as well as Israeli restrictions imposed on Area C – the more than 60 per cent of the West Bank under full Israeli military control.

PMA also highlighted Israel’s ongoing siege of the Gaza Strip as a major hindrance to economic growth, as well as Egypt’s closure of the Rafah crossing that seals Palestinians inside the blockaded territory.

The authority said that its forecast suggested GDP growth would mainly be supported by an increase in Palestinian workers in Israel, an increase in private consumption financed by indebtedness and banking loans, alongside “modest growth” in gross investment, “owing in particular to investment derived from the reconstruction of Gaza Strip, albeit rather slowly”.

Total consumption expenditure is expected to rise by 4.1 per cent (3.7 per cent for private consumption and 5.7 per cent for public consumption), with a slight rise (0.8 per cent) expected in total investment spending.

PMA’s forecast suggested exports could grow by 2.2 per cent, while imports are expected to rise by 3.6 per cent due to strengthening consumption rates. As a result, the trade balance deficit is predicted to widen by about 4.4 per cent.

“It is unlikely that this predicted positive growth will exert any significantly positive impact on job opportunities and employment, with the unemployment rate in Palestine expected to continue to rise to about 27.6 per cent of total labour force in 2017,” the report said.