Restrictions on flow of goods and labour hurt Palestinian economy, UN reports

Unprecedented restrictions on the flow of goods, labour and financial resources have taken a mounting toll on the Palestinian economy, according to a new report by the Geneva-based United Nations Conference on Trade and Development (UNCTAD).

UNCTAD's annual report on assistance to the Palestinian people states that since October 2000, direct losses in national income have been accelerating, while domestic output has been cut by almost half. Gross national income is estimated to have declined by at least 20 per cent in 2000. Unemployment grew sharply, with over a third of the labour force - some 300,000 Palestinians - reported jobless this year. More than 1 million Palestinians are now living under the poverty line of $2.10 a day and the income of around 64 per cent of Palestinian households has fallen below $400 a month.

The report calls for providing social welfare support to households rendered destitute by the crisis, while noting that "a significant impulse to stimulating aggregate demand would come from removal of restrictions imposed on trade and labour since October 2000."

UNCTAD also stresses the importance of elaborating a recovery and reconstruction programme. The report suggests "targeted efforts, aimed at encouraging viable employment opportunities in the domestic economy, beginning with those sectors which had to release labour during the crisis, as well as other branches whose potential contribution to growth, exports and job-creation had already been established."

The report underscores the possibility of setting the Palestinian economy on a sustainable development path through responsive policies, which target long-standing structural weaknesses. It concludes that "following a decade of economic crises and recoveries, high expectations and unmet promises, the recent crisis has in fact reaffirmed the strong interdependence between development and peace."

The report is currently being reviewed by the UNCTAD Trade and Development Board at its two-week meeting in Geneva.