ANKARA
The weak economy maintains high unemployment in the West Bank and Gaza, the International Monetary Fund (IMF) said in a report Thursday.
An IMF mission led by Christoph Duenwald visited East Jerusalem and Ramallah from June 10 to 18 to assess recent economic developments in the West Bank and Gaza and the financial situation of the Palestinian Authority.
After his visit, Duenwald said in a statement that unemployment rates remain high, reaching 42 percent in Gaza and 16 percent in the West Bank.
"Prospects for GDP growth in 2015 are subject to considerable uncertainty, with numerous risks calling for a cautious policy stance. Assuming the political status quo, growth in the West Bank is projected to slow to 2 percent, from 5 percent in 2014," Duenwald said.
Real GDP growth for the West Bank and Gaza is therefore set to reach 3 percent in 2015, barely sufficient to absorb new entrants into the workforce.
Inflation is projected to remain low, in line with subdued inflation in Israel.
The main risks to the outlook include Palestine's potential inability to withstand spending pressures and shortfalls in revenue or donor aid. In addition, the country faces a potential large financial liability related to litigation in a U.S. court.
Duenwald said that an ambitious fiscal structural reform agenda will be instrumental in mobilizing additional, much-needed donor budget support.
"In this volatile environment, safeguarding financial stability remains an essential priority. The banking sector appears robust and well capitalized, with continued low non-performing loan ratios and high levels of liquidity," he said.
