Palestine warned about economic crisis

Published on August 30, 2011 by Tom Pritchard · No Comments

The Palestinian economy is in a fragile state

Despite growth of 9.3% in Israeli occupied areas of Palestine in 2010, the UN has warned that Palestine could be facing its own economic crisis.

The report, produced by the United Nations Conference of Trade and Development (UNCTAD), revealed that despite the growth registered last year, the 30% unemployment rate remained unchanged for the area.

The gross domestic product (GDP) for Palestine last year was said to still be 7% below what it was over ten years ago, in 1999.

The reason for the warning is that the UNCTAD report stresses that severe fiscal leakage is the cause of economic problems. This is because imported goods from Israel are not taxed and a large number of these goods are then exported to occupied Palestinian territory.

Revenue from these imports is then not passed onto the Palestinian Authority by the Israeli Authority, leading to losses. An estimated $480 million is lost per year from the Palestinian Treasury – which amounts to almost 25% of Palestine’s public revenue.

According to the report, if this fiscal leakage was rectified then the Palestinian economy would be able to grow by a further 10%, and employment levels would also be able to increase.

The 9.3% growth which was recorded last year is condemned by the report as not being a marker of sustainable or stable growth. Instead, it is felt that it merely represents the economy bouncing back from a distinctively low base. This is demonstrated by the fact that the growth has occurred after ten years of recessive economic movement.

Palestine could be facing an economic crisis unless it is able to rectify some of the inherent problems within its economy and trading.

Transfer Money to Palestine

If you are looking to invest in Palestine, think carefully about how you will be transferring money to Palestine. Foreign currency exchange rates quoted by banks are almost always worse than the exchange rates available through specialist currency dealers.

So if you are sending money to Palestine – which you will inevitably have to do if you are looking to make a property investment, be sure to compare the market before you buy your overseas currency.