National Early Recovery and Reconstruction Plan for Gaza 2014-2017_FINAL...

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The National Early Recovery and Reconstruction Plan for Gaza 2014
SECTION 1: Setting the Context
between the West Bank and Gaza and all but eliminated Gaza’s export focused private sector. Today, only small shipments of
selected products are permitted to other markets through donor-supported projects.
The result is that real GDP per capita in Gaza has stayed largely stagnant since 1994, whilst real GDP per capita in the West Bank
has more than doubled. Gaza’s contribution to Palestine’s total GDP has shrunk, from over a third in the mid-1990s to a quarter
now. Pre-assault unemployment hit a staggering 45 percent, as compared to 16 percent in the West Bank, and was high as 70
percent amongst Gaza’s youth. Before the latest assault, poverty stood at 38 percent, close to double the level of the West Bank.
A further 30,000 households are estimated to have fallen into poverty as a result of the latest assault.
In this context, Gaza’s recovery and reconstruction must address not only the immediate economic impact of the assault but also
the preexisting structural challenges inhibiting Gaza’s development.
Yet, the Government’s room for maneuver to address these issues directly is limited. Despite fiscal reforms and improvements,
the Government remains reliant on donor support to meet the budget deficit and fund development projects. Additional
spending for recovery and reconstruction will put significant fiscal pressure on the budget, at a time when donor flows have
been steadily declining, falling by 30 percent since 2008. However, since revenues from Gaza in the short term will not be able
to meet more than a small fraction of the additional expenditure – in 2013, only 3 percent of total Government revenues were
collected in Gaza, as compared to 43 percent of budget expenditures there - the Government has no option but to look to its
partners to support the recovery and reconstruction effort.
FIGURE 1: GDP and Real GDP Growth (USD m, %)
FIGURE 1: GDP and Real GDP Growth (USD m, %)
Figure 2: Real GDP per Capita (USD)
Figure 2: Real GDP per Capita (USD)
14000
20.0
4000
12000
15.0
3500
10000
10.0
3000
8000
6000
4000
2000
0
1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
West Bank GDP Gaza GDP Real GDP Growth rate in WB&G
5.0
0.0
-­‐5.0
-­‐10.0
-­‐15.0
2500
2000
1500
1000
500
0
1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Per Capita GDP in West Bank Per Capita GDP in Gaza
SOURCE: World Bank Analysis