Economy of Palestine

Palestine has a developing economy. It relies on money from governments and international organizations.

The service sector is the biggest part of the economy. Other important parts include selling goods, making things, and farming.

Tourism in Palestine is popular in cities like Bethlehem and Jerusalem. Major economic centers are in Ramallah and Hebron. Foreign aid helps the Palestinian Authority and public services. Money sent home by the Palestinian diaspora also supports the economy. The economy still depends on help from places like UNRWA, Qatar, Turkey, the European Union, and non-governmental organizations.

In Gaza, people have trouble moving goods and services because of the Israeli blockade. About 100,000 Palestinians work for Israeli companies, but they are paid less than typical Israeli workers.

History

The Palestinian economy has changed a lot over time. From 1968 to 1980, more goods and services were made for each person every year. By 1991, people lived longer, fewer babies died, and more homes had electricity and clean water.

In the early 1990s, the economy in the West Bank and Gaza had trouble because of rules set by Israel. This made it hard for people to find jobs, and unemployment went up.

During World War II, Palestine grew because it helped with British military work. After the war, Palestine was one of the most advanced places in the Middle East. People worked in construction, farming, and other jobs.

In the 1970s and 1980s, many Palestinians worked in Israel, which helped their economy. But protests against Israeli rule from 1987 to 1993 caused problems and hurt the economy. The Oslo Accords in the 1990s created the Palestinian Authority, which took control of some areas.

After 2000, the economy faced more challenges. In 2013, trade between Israel and the Palestinian territories was worth about US$20 billion.

Sectors

Agriculture

Main article: Agriculture in Palestine

Agriculture is very important to Palestine's economy. It helps feed the people and supports exports. Many people work in farming, and many more depend on it. Farmers grow crops on a lot of land, with olives being a big part of this. Olive products are one of Palestine's biggest export earners.

However, farming faces many challenges. There are difficulties in selling crops and getting supplies. Land is sometimes taken for other uses, and there are barriers that make farming harder in some areas.

High tech

During the 2000s, a technology sector grew in Palestine, helped by its closeness to Israel. By 2013, about 4,500 people worked in technology jobs, mainly in software and communication development. The tech industry grew quickly. Companies like Cisco have helped start this growth.

In 2017, there were many tech start-ups creating jobs and drawing investment. The tech sector continues to grow, with many new businesses and support programs available.

Traditional industries

Main article: Palestinian handicrafts

Palestine has a long tradition of making handmade goods like embroidery, pottery, soap, glass, weaving, and carvings from olive wood and mother of pearl. Cities such as Bethlehem, Hebron, and Nablus are known for their special crafts, which are important for local economies.

Stonecutting is also a traditional job. Workers cut beautiful stones into bricks and tiles, known as Jerusalem stone, which are used in building.

Tourism

Main article: Tourism in Palestine

In 2010, about 4.6 million people visited Palestine, with many coming for short trips. Tourism has grown, but faces challenges due to restrictions on movement. Efforts are being made to attract more visitors, with new hotels and attractions being developed.

Large international hotel brands operate in Palestine, including Intercontinental Jacir Palace, Seven Arches Hotel Intercontinental, Marriott Gaza (later Al-Mashtal), and Millennium Palestine Ramallah Hotel.

Oil and gas

Main article: Energy in Palestine

Palestine has large amounts of oil and gas, but cannot access them. Estimates suggest there are over 3 billion barrels of oil off the coast and under the land. The Levant Basin in the Mediterranean may hold more oil, and there are significant reserves under the West Bank.

There are also natural gas reserves in the Gaza Strip, discovered in 1999. However, development of these resources has been delayed. Some believe that controlling these resources adds complexity to the Israel-Palestine conflict.

Infrastructure

Communications

Main article: Communications in Palestine

In 2016, rules set by Israel made it hard for communication companies in the West Bank to grow. These rules stopped companies from working in many areas and made it difficult to connect to the internet.

Transport

Main article: Transport in Palestine

Water supply and sanitation

Main article: Water supply and sanitation in Palestine

By sub-region

West Bank

In 2007, the economy in the West Bank started to improve slowly. By 2008, more jobs became available, and wages increased. Tourism in Bethlehem grew a lot, and life expectancy reached 73.4 years.

New businesses opened, like a Small Enterprise Center in Bethlehem in 2008, which helped people learn new skills.

By 2009, the economy grew more, with new shopping places and plans for a modern city called Rawabi.

In 2010, Ramallah became a busy place for business because of better safety and fewer problems with unfair money use.

East Jerusalem

East Jerusalem used to be a busy shopping place, but after security checks and barriers were put up, it became harder for people to visit. This made it tough for businesses to do well, and many people there became poor.

Gaza Strip

Main article: Economy of the Gaza Strip

Because of rules set by Israel and changes in leadership, many people in Gaza have had a hard time finding jobs and making money. Help from groups like the UN has been important.

In 2010, things started to get a little better, with new shops opening and more building happening. However, many people still struggle.

Currency

Further information: Palestine pound

Because of special rules, the people of Palestine cannot have their own money. Instead, they mainly use the Israeli new shekel for everyday buying and selling. In the West Bank, some people also use the Jordanian dinar for saving money or buying big, lasting things. The United States dollar is sometimes used too, especially for saving or buying things from other countries.

The Palestinian Monetary Authority, which works like a bank for Palestine, cannot print its own money. This makes it hard for them to control money matters well. Using many different kinds of money also makes things more expensive and less easy because the value of these monies can change.

In the Gaza Strip, the Israeli shekel is also used most often, but there isn’t enough of it because of limits put in place by nearby countries.

Taxation

Main article: Taxation in Palestine

In the Palestinian territories, there are many different taxes. Both the Palestinian Authority and Israel collect taxes. In 2005, the Palestinian Authority collected money each month from taxes. Israel also collected money from taxes on things brought into the country. Israel used some of this money to pay for services for Palestinians and sent the rest to the Palestinian Authority. Since 2006, Israel has sometimes kept back some of these taxes.

Employment

Farming helps many people in Palestine find work, but jobs can also be found in other ways that are not officially counted. For the past ten years, finding jobs has been difficult, and farming has become a less profitable part of Palestine.

Because jobs are hard to find in Palestine, about 100,000 people from Palestine went to work in Israel. By March 2014, around 45,000 work permits were given for jobs in Israel, and another 25,000 for jobs in places called West Bank settlements. Some people worked without permits. Rules about who can get a permit have changed, making it easier for younger people to get jobs in Israel.

Working in Israel means people earn more money. In 2013, daily pay in Israel was almost twice as much as in the West Bank and more than four times as much as in Gaza. By 2022, the smallest monthly pay in Palestine was ₪1,450, which is much less than the smallest pay in Israel, ₪5,300. While some rules from Israel help workers in the West Bank, sometimes employers do not follow the rules.

Foreign aid

Main article: International aid to Palestinians

In 2008, the economies of the West Bank and Gaza needed help from other countries. This help was worth about 1.8 billion dollars and made up around 30% of everything the area made in a year. This aid helped provide important services for many people and allowed the Palestinian Authority to pay its workers.

Later, in 2010, some Arab countries gave less money. By August of that year, the Palestinian Authority had received about $583.5 million, but only a small part of that came from Arab countries. The rest came from places like the European Union and the United States. In 2011, leaders asked for $5 billion more to help the economy grow. There was also a plan in 2013 to bring in $4 billion to support the economy, but it did not happen because peace talks between Israelis and Palestinians did not succeed.

Israeli–Palestinian relations

Further information: Israel–Palestine relations

Commerce

Olives of Peace is a project where Israelis and Palestinians work together to sell olive oil. People from both sides have trained and planned together. The oil is sold under the name "Olives of Peace." There are plans for a joint industrial zone to help connect the two areas. Palestinians could make and sell handicrafts, and there are ideas for a language center where people could learn each other’s languages and share parts of their cultures.

In 2011, trade between Israel and the areas ruled by Palestinians reached $4.3 billion. Israeli exports to these areas were $3.5 billion, and Palestinian exports to Israel were $816 million. Experts from both sides met in 2012 to talk about ways to improve business between them. By 2013, trade between Israel and the Palestinian Authority was worth about US$20 billion each year. This growing trade led to the creation of the Jerusalem Arbitration Center, a place to solve business disagreements between Israelis and Palestinians.

Conflict

See also: Israeli–Palestinian conflict § Agriculture

In 2006, the Palestinian economy faced big changes after a split between two groups. A war in 2008–2009 damaged buildings and jobs in Gaza, leaving the economy struggling. The Oslo Accords in 1993 tried to help, but the economy still faced many problems. Today, the Palestinian economy depends on help from other countries and money from trade with Israel. However, limits set by Israel make it hard for the economy to grow. By 2008, many people in Gaza had no jobs. For the economy to get better, these limits need to be lifted.

Macroeconomic data

The following table shows the main economic numbers from 1994 to 2023. Inflation rates below 5% are shown in green.